LOAN AGREEMENT by and between NEW JERSEY ECONOMIC DEVELOPMENT AUTHORITY and SOUTH JERSEY GAS COMPANY Dated as of April 1, 2006
by
and
between
NEW
JERSEY ECONOMIC DEVELOPMENT AUTHORITY
and
SOUTH
JERSEY GAS COMPANY
Dated
as
of April 1, 2006
1011002.2
TABLE
OF CONTENTS
ARTICLE
I
DEFINITIONS
AND INTERPRETATION
Page
|
Section
1.01.
|
Definitions............................................................................................................................................................................................
|
3 |
|
Section
1.02.
|
Interpretation
and
Construction...........................................................................................................................................................
|
10 |
ARTICLE
II
THE
LOAN
|
Section
2.01.
|
Lending
Clauses.................................................................................................................................................................................
|
12 |
|
Section
2.02.
|
Payment
of
Loan.................................................................................................................................................................................
|
13 |
|
Section
2.03.
|
Other
Amounts
Payable....................................................................................................................................................................
|
14 |
|
Section
2.04.
|
Manner
of Payment;
Assignment....................................................................................................................................................
|
15 |
|
Section
2.05.
|
Options
to Prepay the Loan or any additional
loan......................................................................................................................
|
16 |
|
Section
2.06.
|
Effective
Date and Term; Obligation
Unconditional.....................................................................................................................
|
16 |
|
Section
2.07.
|
Cancellation
at Expiration of
Term...................................................................................................................................................
|
17 |
|
Section
2.08.
|
Security
Clauses.................................................................................................................................................................................
|
17 |
|
Section
2.09.
|
Representations..................................................................................................................................................................................
|
17 |
|
Section
2.10.
|
Standby
Purchase Agreement; Alternate Liquidity
Facility........................................................................................................
|
21 |
|
Section
2.11.
|
Obligation
to
Prepay..........................................................................................................................................................................
|
23 |
ARTICLE
III
THE
PROJECT
|
Section
3.01.
|
Issuance
of 2006
Bonds....................................................................................................................................................................
|
24 |
|
Section
3.02.
|
Disbursements
from the Construction
Fund.................................................................................................................................
|
24 |
|
Section
3.03.
|
No
Liability of Authority or
Trustee...............................................................................................................................................
|
25 |
|
Section
3.04.
|
Establishment
of Completion
Date..................................................................................................................................................
|
25 |
|
Section
3.05.
|
Borrower
Required to Pay if Construction Fund
Insufficient.....................................................................................................
|
26 |
|
Section
3.06.
|
Issuance
of Additional
Bonds.........................................................................................................................................................
|
26 |
|
Section
3.07.
|
Preservation
of Corporate Existence, Business and
Property.....................................................................................................
|
27 |
|
Section
3.08.
|
Insurance
Required............................................................................................................................................................................
|
27 |
|
Section
3.09.
|
General
Requirements Applicable to
Insurance.............................................................................................
|
28 |
|
Section
3.10.
|
Payment
of Taxes,
etc........................................................................................................................................................................
|
28 |
1011002.2
|
Section
3.11.
|
Compliance
with Applicable
Laws..................................................................................................................................................
|
29 |
|
Section
3.12.
|
Covenant
with Respect to the
Insurer............................................................................................................................................
|
29 |
|
Section
3.13.
|
Financial
Statements..........................................................................................................................................................................
|
30 |
|
Section
3.14.
|
Transfer
of Project
Facilities.............................................................................................................................................................
|
30 |
|
Section
3.15.
|
Cost
Recovery....................................................................................................................................................................................
|
30 |
|
Section
3.16.
|
Covenant
by Company as to Compliance with
Indenture...........................................................................................................
|
30 |
|
Section
3.17.
|
Investment
of Bond Fund and Rebate Fund
Moneys.................................................................................................................
|
30 |
ARTICLE
IV
PARTICULAR
COVENANTS
|
Section
4.01.
|
Access
to the Project and
Inspection.............................................................................................................................................
|
32 |
|
Section
4.02.
|
Further
Assurances and Corrective
Instruments..........................................................................................................................
|
32 |
|
Section
4.03.
|
Recording
and Filing; Other
Instruments.......................................................................................................................................
|
32 |
|
Section
4.04.
|
Compliance
with Code, Arbitrage and Rebate
Regulations........................................................................................................
|
33 |
|
Section
4.05.
|
Administrative
Expenses..................................................................................................................................................................
|
38 |
|
Section
4.06.
|
Indemnity
Against
Claims................................................................................................................................................................
|
38 |
|
Section
4.07.
|
Indemnification
of the Authority and the
Trustee.......................................................................................................................
|
39 |
|
Section
4.08.
|
Additional
Information......................................................................................................................................................................
|
40 |
|
Section
4.09.
|
Maintain
Existence.............................................................................................................................................................................
|
41 |
|
Section
4.10.
|
Use
of
Project.....................................................................................................................................................................................
|
41 |
|
Section
4.11.
|
Change
in
Location............................................................................................................................................................................
|
42 |
|
Section
4.12.
|
Additional
Reporting
Requirements...............................................................................................................................................
|
42 |
|
Section
4.13.
|
Observe
Laws.....................................................................................................................................................................................
|
42 |
|
Section
4.14.
|
Number
of
Employees.......................................................................................................................................................................
|
42 |
|
Section
4.15.
|
Authority
Consent to Sale of
Assets.............................................................................................................................................
|
42 |
|
Section
4.16.
|
Approval
of Tenants by the
Authority..........................................................................................................................................
|
43 |
|
Section
4.17.
|
Continuing
Disclosure......................................................................................................................................................................
|
43 |
|
Section
4.18.
|
Brokerage
Fee.....................................................................................................................................................................................
|
43 |
|
Section
4.19.
|
Assignment
of Loan
Agreement.....................................................................................................................................................
|
43 |
|
Section
4.20.
|
Compliance
with the Affirmative Action and Prevailing Wage
Requirements.........................................................................
|
44 |
ARTICLE
V
EVENTS
OF
DEFAULT AND REMEDIES
|
Section
5.01.
|
Events
of
Default...............................................................................................................................................................................
|
45 |
|
Section
5.02.
|
Remedies
on
Default..........................................................................................................................................................................
|
46 |
|
Section
5.03.
|
No
Duty to Mitigate
Damages.........................................................................................................................................................
|
47 |
|
Section
5.04.
|
Remedies
Cumulative........................................................................................................................................................................
|
47 |
|
Section
5.05.
|
Exercise
of
Remedies.........................................................................................................................................................................
|
47 |
|
Section
5.06.
|
Agreement
to Pay Reasonable Attorneys Fees and
Expenses...................................................................................................
|
47 |
|
Section
5.07.
|
No
Additional Waiver Implied by One
Waiver.............................................................................................................................
|
48 |
|
Section
5.08.
|
Specific
Performance.........................................................................................................................................................................
|
48 |
1011002.2
ARTICLE
VI
CONDITIONS
OF LENDING
|
Section
6.01.
|
Opinion
of Counsel for the
Borrower..............................................................................................................................................
|
49 |
|
Section
6.02.
|
Opinion
of Bond
Counsel.................................................................................................................................................................
|
49 |
|
Section
6.03.
|
Loan
and Other
Documents.............................................................................................................................................................
|
49 |
|
Section
6.04.
|
Legal
Matters......................................................................................................................................................................................
|
50 |
|
Section
6.05.
|
Bond
Issuance
Fee............................................................................................................................................................................
|
50 |
ARTICLE
VII
MISCELLANEOUS
|
Section
7.01.
|
Notices.................................................................................................................................................................................................
|
51 |
|
Section
7.02.
|
Amendments.......................................................................................................................................................................................
|
52 |
|
Section
7.03.
|
Expenses
and
Fees.............................................................................................................................................................................
|
52 |
|
Section
7.04
|
Concerning
Successors and
Assigns.............................................................................................................................................
|
52 |
|
Section
7.05.
|
Benefit
of and Enforcement by
Bondholders................................................................................................................................
|
52 |
|
Section
7.06.
|
Prior
Agreements
Superseded.........................................................................................................................................................
|
53 |
|
Section
7.07.
|
Execution
of
Counterparts................................................................................................................................................................
|
53 |
|
Section
7.08.
|
Date
of Loan Agreement for Identification Purposes Only; Effective
Date.............................................................................
|
53 |
|
Section
7.09.
|
Laws
Governing Loan
Agreement...................................................................................................................................................
|
53 |
|
Section
7.10.
|
Parties
Interested
Herein...................................................................................................................................................................
|
53 |
|
Section
7.11.
|
Assignment
of Lending
Documents...............................................................................................................................................
|
54 |
|
Section
7.12.
|
Further
Assurances and Corrective
Instruments..........................................................................................................................
|
54 |
|
Section
7.13.
|
No
Recourse to Stockholders, Directors, Officers,
etc.................................................................................................................
|
54 |
|
Exhibit
A
|
Description
of First Mortgage Bond
|
|
|
Exhibit
B
|
Form
of Borrower's Completion Certificate
|
|
|
Exhibit
C
|
Form
of Requisition
|
|
|
Exhibit
D
|
Addendum
to Construction Contract
|
|
|
Exhibit
E
|
Affirmative
Action Certificate
|
|
|
Exhibit
F
|
Completion
Certificate
|
1011002.2
THIS
LOAN
AGREEMENT
dated as
of April 1, 2006 by and between the NEW
JERSEY ECONOMIC DEVELOPMENT AUTHORITY
(the
"Authority"), a public body corporate and politic constituting an
instrumentality of the State of New Jersey (the "State"), and SOUTH
JERSEY GAS COMPANY,
a
corporation duly organized, validly existing and in good standing under the
laws
of the State of New Jersey (the "Borrower") (capitalized terms not defined
in
the preambles hereto are defined in Section 1.01 herein).
W
I T N E S S E T H T H A T :
WHEREAS,
the New
Jersey Economic Development Authority Act, constituting Chapter 80 of the
Pamphlet Laws of 1974 of the State of New Jersey (the "State") approved August
7, 1974, as amended and supplemented (the "Act"), declares it to be in the
public interest and to be the policy of the State to ▇▇▇▇▇▇ and promote the
economy of the State, increase opportunities for gainful employment and improve
living conditions, assist in the economic development or redevelopment of
political subdivisions within the State, and otherwise contribute to the
prosperity, health and general welfare of the State and its inhabitants by
inducing manufacturing, industrial, commercial, recreational, retail, service
and other employment promoting enterprises to locate, remain or expand within
the State by making available financial assistance; and
WHEREAS,
the
Authority was created to implement the purposes of the Act, and the Legislature
has determined and declared as a matter of express legislative determination
that the authority and powers conferred upon the Authority under the Act
and the
expenditure of moneys pursuant thereto constitute a serving of a valid public
purpose and that the enactment of the provisions set forth in the Act is
in the
public interest and for the public benefit and good; and
WHEREAS,
the
Authority, to accomplish the purposes of the Act, is empowered to extend
credit
or make loans to any Person for the planning, designing, acquiring,
constructing, reconstructing, improving, equipping and furnishing of a project
for which credits or loans may be secured by loan agreements, security
agreements, mortgages, leases, contracts and any other instruments, upon
such
terms and conditions as the Authority shall deem reasonable, and to require
the
inclusion in any loan agreement, security agreement, mortgage, lease, contract,
and any other instrument, such provisions for the construction, use, operation
and maintenance and financing of a project as the Authority deem necessary
or
desirable and to enter into contracts via respect to the planning, designing,
financing, construction, reconstruction, improvement, equipping, furnishing,
operation and maintenance of a project, for such consideration and upon such
terms and conditions as the Authority may determine to be reasonable;
and
WHEREAS,
in
furtherance of the purposes of the Act and as an inducement to the Borrower
to
undertake financing the design, purchase and construction of natural gas
pipelines and ancillary and related facilities servicing the Borrower’s
customers in the County of Atlantic and the County of Cape May, State of
New
Jersey (the “Project” or the “Project Facilities”), the Authority has duly
accepted the application of the Borrower for assistance in the financing
of the
Project by a resolution adopted July 12, 2005 (hereinafter the "Preliminary
Resolution");
1011002.2
1
WHEREAS,
the
Authority has, by virtue of a Bond Resolution adopted February 14, 2006 (the
"Bond Resolution"), duly authorized the issuance of its Natural Gas Facilities
Revenue Bonds, Series 2006-1 (South Jersey Gas Company Project) in the aggregate
principal amount not to exceed $25,000,000 (the "2006 Bonds") to provide
funds
for the making of a loan to the Borrower in order to finance a portion of
the
costs of the Project; and
WHEREAS,
pursuant to the Bond Resolution, the 2006 Bonds shall be issued in accordance
with, and secured as provided in, an Indenture of Trust (the "Indenture")
dated
as of April 1, 2006 by and between the Authority and The Bank of New York,
as
Trustee; and
WHEREAS,
the
2006 Bonds shall be special limited obligations of the Authority, payable
solely
from the revenues or other receipts, funds or moneys to be derived by the
Authority under this Loan Agreement or the Indenture, including the liquidation
of collateral pledged by the Borrower as security for its performance hereunder;
and
WHEREAS,
the
Borrower concurrently herewith has agreed to deliver to the Authority its
Medium
Term Notes, (the “Initial Medium Term Notes”) Series C, 2006-1 and with any
Medium Term Notes issued in an conjunction with any Additional Bonds, the
“Medium Term Notes”) in accordance with the terms of this Loan Agreement;
and
WHEREAS,
the
execution and delivery of this Loan Agreement have been duly authorized by
the
Authority, and all conditions, acts and things necessary and required by
the
Constitution and statutes of the State or otherwise to exist, to have happened,
or to have been performed precedent to and in the execution and delivery
of this
Loan Agreement and in the issuance of the 2006 Bonds authorized in the
Indenture, do exist, have been done and have been performed in regular form,
time; and
WHEREAS,
Financial Guaranty Insurance Company (the “Insurer”) is to issue its Bond
Insurance Policy for the 2006 Bonds to guarantee payment of the principal
of the
2006 Bonds upon the stated maturity thereof, the redemption price of the
2006
Bonds upon certain mandatory redemptions and interest on the 2006 Bonds as
the
same accrues and becomes due and payable.
NOW,
THEREFORE,
for and
in consideration of the premises and of the mutual representations, covenants
and agreements herein set forth, the Authority and the Borrower, each binding
itself, its successors and assigns, do mutually promise, covenant and agree
as
follows provided that in the performance of the agreements of the Authority
herein contained, any obligation it may incur for the payment of money shall
not
be an obligation, debt or liability of the State or any political subdivision
thereof and neither the State nor any such political subdivision shall be
liable
on any obligation so incurred, but any such obligation shall be payable solely
out of the revenues or other receipts, funds or moneys to be derived by the
Authority under this Loan Agreement or the Indenture, including the liquidation
of collateral pledged by the Borrower as security for its performance
hereunder.
1011002.2
2
ARTICLE
I
DEFINITIONS
AND INTERPRETATION
Section
1.1 Definitions.
In
addition to the words and terms elsewhere defined in this Loan Agreement
the
following words and terms shall have the following meanings, unless a different
meaning clearly appears from the context (capitalized terms used herein and
not
defined shall have the meanings given thereto in the Indenture):
"Act"
means The New Jersey Economic Development Authority Act, constituting Chapter
80
of the Pamphlet Laws of 1974 of the State, as amended and
supplemented.
"Additional
Medium Term Note" means any additional notes issued to the Authority or Trustee
by the Borrower pursuant to the Note Indenture to evidence the obligation
of the
Borrower to pay amounts borrowed from the Authority from the proceeds of
Additional Bonds.
"Affirmative
Action Program" shall mean the provisions of the Act, the resolutions, rules
and
regulations of the Authority, as adopted, amended and supplemented from time
to
time, requiring that the Borrower and all Contractors make a good faith effort
to hire minority workers or to cause minority workers to be hired for employment
in performance of Construction Contracts in fulfillment of the minority
employment goals fixed by Authority, and that the Borrower and all Contractors
file such certificates, reports, and records and to do other prescribed acts
as
are necessary to demonstrate or assure compliance.
“Alternate
Liquidity Facility” means a liquidity facility or facilities provided in
accordance with Section 2.10 hereof, other than a Substitute Standby Purchase
Agreement, including, without limitation, a line of credit of a commercial
bank
or a liquidity facility from a financial institution, or a combination thereof,
the administrative provisions of which are acceptable to the Trustee, or
any
other liquidity agreement or mechanism arranged by the Company (which may
involve a line of credit or other liquidity facility), the administrative
provisions of which are acceptable to the Trustee, which provides liquidity
for
payment of the purchase price of Bonds delivered to the Trustee. An Alternate
Liquidity Facility may have an expiration date earlier than the maturity
of the
Bonds.
"Application"
means the application for financial assistance submitted by the Borrower
to the
Authority with respect to the Project and any amendments as on file at the
Authority's offices.
"Authority"
means the New Jersey Economic Development Authority, a public body corporate
and
politic constituting an instrumentality of the State duly organized and existing
under the laws of the State exercising public and essential governmental
functions and any body, board, authority, agency or other political subdivision
or instrumentality of the State which shall hereafter succeed to its powers,
duties and functions.
1011002.2
3
"Authorized
Representative" means, in the case of the Authority, any member, officer
or
employee thereof, duly authorized by the Authority in the Bond Resolution
to act
on its behalf, or in the case of the Borrower, any Person duly authorized
in
writing to act on behalf of the Borrower.
"Bond
Counsel" shall mean an attorney or firm of attorneys of nationally recognized
standing on the subject of municipal bonds appointed by the Authority or
the
Borrower.
"Bond
Fund" shall have the meaning ascribed to that term in the
Indenture.
"Bond
Insurance Policy" shall mean the Bond Insurance Policy issued by Financial
Guaranty Insurance Company.
"Bond
Proceeds" shall mean the amount paid to the Authority by the Underwriters
as the
purchase price of the Bonds, and interest income earned thereon.
"Bond
Purchase Agreement" means the Bond Purchase Agreement dated April 19, 2006
among
the Authority, the Borrower and the Underwriters relating to the sale of
the
2006 Bonds.
"Bond
Resolution" means the resolution of the Authority, adopted and entitled
"Resolution Authorizing the Issuance and Sale of Natural Gas Facilities Revenue
Bonds, Series 2006-1 (South Jersey Gas Company Project) of the New Jersey
Economic Development Authority in an Aggregate Principal Amount Not to Exceed
$25,000,000 and Authorizing and Approving the Execution and Delivery of a
Loan
Agreement and Related Instruments Annexed Thereto, an Indenture of Trust
and
Related Instruments Annexed Thereto, a Bond Purchase Agreement and Related
Instruments Annexed Thereto, an Official Statement and Related Instruments
Annexed Thereto and Determining Other Matters in Connection
Therewith."
"Bond
Year" when used in the context of the rebate requirement imposed under Section
148(f) of the Code means, with respect to the first Bond Year, the period
beginning on the date of issuance of the Bonds, i.e., the date of initial
delivery of the Bonds in exchange for the issue price from the Underwriter,
and
ending on the date one (1) year later or the close of business of such earlier
date selected by the Authority at the direction of the Borrower which is
the
last day of a compounding interval used in computing the Yield on the Bonds.
Each subsequent Bond Year begins on the day after the expiration of the
preceding Bond Year.
“Bond”
or
“Bonds” means any bond or bonds of the Authority authenticated and delivered
pursuant to the Indenture, consisting of the 2006 Bonds, any Additional Bonds
and any bonds issued in lieu of or substitution therefor (including, without
limitation, Bank Bonds).
"Borrower"
means South Jersey Gas Company, a corporation duly organized, validly existing
and in good standing under the laws of the State, and its successors and
assigns.
"Borrower's
Completion Certificate" shall mean a certificate executed by the Borrower
in
conformity with Section 3.04 hereof .
1011002.2
4
"Business
Day"
means
any day other than (i) a Saturday or Sunday, (ii) a day on which
commercial banks in New York, New York, or the city or cities in which are
located the principal corporate trust offices of the Trustee, the Tender
Agent,
the Remarketing Agent, the designated officer of the Broker-Dealers and the
Auction Agent, and the office of the Agent Bank or the Agent Obligor on an
Alternate Liquidity Facility at which demands for payment under the Liquidity
Agreement are to be presented are authorized by law or executive order to
close
or (iii) a day on which the New York Stock Exchange, Inc. is
closed.
"Closing
Date" means April 20, 2006.
"Code"
means the Internal Revenue Code of 1986, as amended. Each reference to a
section
of the Code herein shall be deemed to include the United States Treasury
Regulations, including temporary and proposed regulations relating to such
section which are applicable to the Bonds or the use of the proceed
thereof.
"Completion
Date" shall mean the date of completion of the Project as stated in the
Borrower's Completion Certificate described in Section 3.04 hereof.
"Construction
Contract" shall mean, for purposes of the Prevailing Wage Requirements of
the
Authority, any contract or subcontract in the amount of $2,000 or more for
construction, reconstruction, demolition, alteration, repair, or maintenance
work, including painting and decorating, undertaken in connection with the
Project and shall mean, for purposes of the Affirmative Action Program, any
contract or subcontract for construction, reconstruction, renovation or
rehabilitation undertaken in connection with the Project.
"Contractor"
shall mean the principal or general contractor or contractors engaged by
the
Borrower in the performance of a Construction Contract.
"Contractor's
Certificate and Agreement" shall mean the instrument executed by the Contractor
wherein the Contractor agrees to undertake or perform such obligations and
certifies as to such matters as the Authority shall require, including, without
limitation, that for purposes of the Prevailing Wage Requirements all workers
engaged in the performance of Construction Contracts shall be paid a wage
rate
not less than the Prevailing Wage Rate and that all Construction Contracts
will
so provide and that for purposes of the Affirmative Action Program the
Contractor will make a good faith effort to hire or cause to be hired minority
workers so as to meet the minority employment goals of the Affirmative Action
Program and that all Construction Contracts will so provide.
"Contractor's
Completion Certificate" shall mean the certificate or certificates, executed
by
the Contractor and any Subcontractors, upon substantial completion of Project
construction, in form and substance acceptable to the Authority, wherein
the
Contractor or Subcontractor certifies as to such matters as the Authority
shall
require, including, without limitation, that the Contractor or Subcontractor
has
made a good faith effort to satisfy the minority employment goals established
in
the Affirmative Action Program and that the Contractor or Subcontractor
has
submitted all certificates, reports, and records required by the
Authority.
1011002.2
5
"Cost"
or
"Costs" means the reimbursement of or payment for items which are eligible
for
such reimbursement or payment pursuant to Section 3(c) of the Act.
"Counsel
for the Borrower" shall mean the law firm of Cozen ▇’▇▇▇▇▇▇, Newark, New
Jersey.
"Event
of
Default" is a term defined in Section 5.01 of this Loan Agreement.
“First
Mortgage Bonds” has the meaning set forth in Exhibit A hereto and shall include
any Substituted First Mortgage Bonds as set forth in Exhibit A
hereto.
"Fiscal
Year" means the twelve (12) months ending December 31 in a year or such other
twelve month period as the Borrower may determine by written notice to the
Trustee.
"Fund"
shall have the meaning ascribed to that term in the Indenture.
"Future
Value" means, with respect to any payment or receipt paid or received on
any
date (or treated as paid or received), the value of the payment or receipt
on
that date increased by interest assumed to be earned and compounded at the
end
of each compounding interval over any specified future period using a
compounding rate equal to the Yield on the Bonds and the compounding interval
and financial conventions used to compute Yield on the Bonds.
"Gross
Proceeds" shall have the meaning given it in Section 148(f)(6)(B) of the
Code,
presently including, without limitation, the original proceeds of the Bonds,
investment proceeds, amounts held in a sinking fund, amounts invested in
a
reasonably required reserve or replacement fund (as defined in Section 148(d)
of
the Code), any amounts used to pay debt service on the Bonds and any amounts
received as a result of investing any of the foregoing. Gross proceeds shall
not
include Gross Proceeds held in a Bona Fide Debt Service Fund (as defined
in
Section 1.148-1 of the Regulations) to the extent that the earnings on such
fund
do not exceed $100,000 in any one Bond Year.
"Indemnified
Parties" means the Authority, the State, agencies of the State, members,
agents,
officers and employees and any Person who "controls" the Authority or the
State
(within the meaning of Section 15 of the Securities Act of 1933, as amended),
the Trustee, the Paying Agent, the Registrar and the Tender Agent and directors,
agents, officers and employees of the Trustee, Paying Agent, Registrar or
Tender
Agent.
"Indenture"
or "Indenture of Trust" means the Indenture of Trust dated as of April
1, 2006
by and between the Authority and the Trustee, as the same may from time
to time
be amended, modified or supplemented by supplemental indentures made and
entered
into in accordance therewith.
"Initial
Medium Term Note" mean the Medium Term Note, Series C, 2006-1 in the aggregate
principal amount of $25,000,000 issued pursuant to the Note
Indenture.
1011002.2
6
“Insurance
Agreement” shall mean the Insurance Agreement dated April 20, 2006 between the
Company and the Insurer, and any amendments or supplements thereto.
"Insurer"
shall mean Financial Guaranty Insurance Company.
“Investment”
shall have the meaning set forth in Section 1.148-1(b) of the
Regulations.
"Investment
Obligations" shall have the same meaning ascribed to that term in the
Indenture.
"Issue
Date" shall mean April 20, 2006.
"Lending
Documents" means this Loan Agreement and the Initial Medium Term Note; and
all
other documents and instruments executed in connection with either of them
and
delivered to the Authority, the Trustee or the Note Trustee.
"Loan"
means the loan in the amount of $25,000,000 made hereunder by the Authority
as
lender from the proceeds of the issuance of the 2006 Bonds to the Borrower
as
debtor to provide financing for a portion of the cost of the
Project.
"Loan
Agreement" means this Loan Agreement and any amendments and supplements hereto
made in conformity herewith and with the Indenture.
"Medium
Term Note" shall mean any of the notes of the Borrower issued under the Note
Indenture and delivered to the Authority or the Trustee pursuant to this
Loan
Agreement.
“Mortgage
Indenture” has the meaning set forth in Exhibit A hereto and shall include any
Substituted Mortgage as set forth in Exhibit A hereto.
"Net
Proceeds" shall mean the Bond Proceeds less any amounts placed in a reasonably
required reserve or replacement fund (as defined in Section 148(d) of the
Code).
"Non-Purpose
Investment" shall have the meaning set forth in Section 1.148-1(b) of the
Regulations.
"Non-Purpose
Obligations" shall mean any "investment property" (within the meaning of
Section
148(b)(2) of the Code) which is (i) acquired with the Gross Proceeds of
the
Bonds and (ii) not acquired in order to carry out the governmental purpose
of
the Bonds.
"Note
Indenture" shall mean the Indenture of Trust dated as of October 1, 1998
by and
between the Borrower and The Bank of New York, as trustee, as heretofore
or
hereafter supplemented or amended, under which The Bank of New York is
the
current Trustee.
"Note
Trustee" means The Bank of New York, as the present trustee under the Note
Indenture, and its successors in the trusts thereby
created.
1011002.2
7
"Official
Statement" means the Official Statement dated April 13, 2006 (including,
without
limitation, documents incorporated by reference therein) delivered in connection
with the sale of the 2006 Bonds.
"Outstanding"
shall have the same meaning ascribed to that term in the Indenture.
"Payment
Date" means each and every date upon which the payment of interest or principal
and interest is due in accordance with the payment provisions of the Bonds,
or
such other date as may be determined by the Trustee in accordance with Section
603(b) of the Indenture.
"Permitted
Encumbrance" has the same meaning given to that term in the Note
Indenture.
"Person"
means one or more individuals, estates, joint ventures, joint stock companies,
partnerships, associations, corporations, trusts or unincorporated
organizations, and one or more governments or agencies or political subsidiaries
thereof.
“Pledged
Bonds” has the meaning set forth in Exhibit A hereto.
"Prevailing
Wage Rate" shall mean the prevailing wage rate established by the Commissioner
of the New Jersey Department of Labor and Industry from time to time in
accordance with the provisions of N.J.S.A. 34:11-56.30 for the localities
in
which the Project is located.
"Prevailing
Wage Requirements" means the requirements contained in the Authority's
Prevailing Wage Regulation as set forth at N.J.A.C.
19:30-4.1 et seq.
"Proper
Charge" shall mean: (i) issuance costs of the Bonds, including, without
limitation, underwriter's discount, certain attorneys' fees, printing costs,
initial trustee's fees and similar expenses, which shall at no time exceed
two
per centum (2%) of the face amount of the Bonds; or (ii) an expenditure
for the
Project, paid and incurred no earlier than sixty (60) days prior to July
12,
2005 as to the Project used for the acquisition or improvement of a "facility
for the local furnishing of gas" within the meaning of Section 142(a)(8)
of the
Code, including amounts which are chargeable to the Borrower's capital
account
or would be so chargeable either with a proper election by the Borrower
or but
for a proper election by the Borrower to deduct such amount (including
without
limitation interest incurred prior to establishment of the Completion Date);
or
(iii) expenditures for the Project which, after taking into account all
expenditures under (i) above, will not result in less than ninety-five
per
centum (95%) of the Net Proceeds of the Bonds being expended for expenditures
other than those referred to in (ii) above.
"Qualified
Administrative Costs" means all reasonable, direct administrative costs
(other
than carrying costs) such as a separately stated brokerage or selling
commissions, but not legal and accounting fees, record keeping, custody
and
similar costs. General overhead costs and similar indirect costs of the
Borrower
such as employee salaries and office expenses and costs associated with
computing the Rebate Amount are not Qualified Administrative Costs. In
general,
administrative costs are not reasonable unless they are
1011002.2
8
comparable
to administrative costs that would be charged for the same Investment or
a
reasonably comparable Investment if acquired with a source of funds other
than
gross proceeds of Tax-Exempt bonds.
"Rebate
Amount" means the amount determined in accordance with Section 4.04(f)
hereof.
"Rebate
Expert" means any of the following chosen by the Borrower: (a) Bond Counsel,
(b)
any nationally recognized firm of certified public accountants, (c) any
reputable firm which offers to the tax-exempt bond industry rebate calculation
services and holds itself out as having expertise in that area, or (d) such
other Person as is approved by Bond Counsel.
"Rebate
Fund" shall have the meaning ascribed to that term in the
Indenture.
"Rebate
Requirement" means the cumulative amounts calculated in accordance with Section
148 (f) of the Code from the issuance date of the Bonds to any date of
calculation equal to the excess of the future value, as of that date, of
all
receipts on nonpurpose investments (as defined in Section 148 of the Code)
over
the future value, as of that date, of all payments on nonpurpose
investments.
"Regulations"
means the Treasury Regulations promulgated pursuant to the Code.
"Related
Bonds" shall have the meaning ascribed to that term in Section 2.01
hereof.
"Related
Person" shall have the meaning ascribed to that term in Section 144(a)(3)
or
147(a)(2) of the Code.
"Requisition
Form" shall mean the form of requisition required by Section 3.02 hereof
as a
condition precedent to the disbursement of moneys from the Construction
Fund, in
the form annexed hereto as Exhibit C.
“Reserved
Rights” means the rights of the Authority to (i) receive payments and notices
under this Loan Agreement or any other Lending Document, (ii) to consent
to any
amendments, modifications or supplements to this Loan Agreement or (iii)
any
other Lending Document, to enforce pursuant to Article V hereof the Defaults
and
Remedies herein and the covenants or other provisions in this Loan Agreement
under the following Sections of this Loan Agreement: 2.09(a) (Omitted Action),
2.09(b) (Taxability), 2.09(c) (Compliance With Construction Requirements),
2.09(d) (Important Inducement), 2.09(f) (Project), 2.09(g) (Compliance
With
Laws), 2.09(r) (No Untrue Statements), 2.11 (Obligation to Prepay), 3.02(b)
(Disbursements), 3.03 (No Liability), 3.07 (Corporate Existence), 3.08
(Insurance Required), 3.09 (General Requirements Applicable to Insurance),
3.10
(Payment of Taxes), 3.11 (Compliance with Applicable Laws), 3.14 (Transfer
of
Project Facilities), 3.16 (Covenant by Company as to Compliance with Indenture),
4.01 (Access to the Project and Inspection), 4.02 (Further Assurance and
Corrective Instruments), 4.03 (Recording and Filing; Other Instruments),
4.04
(Compliance with Code, Arbitrage and Rebate Regulations), 4.05 (Administrative
Expenses), 4.06 (Indemnity Against Claims), 4.07 (Indemnification of Authority
and Trustee), 4.08 (Additional Information), 4.09 (Maintain Existence),
4.10
(Use of Project), Section 4.11
1011002.2
9
(Change
in Location), 4.12 (Additional Reporting Requirements), 4.13 (Observe Laws),
4.14 (Number of Employees), 4.15 (Authority Consent to Sale of Assets), 4.16
(Approval of Tenants), 4.17 (Continuing Disclosure), 4.18 (Brokerage Fees),
4.19
(Assignment of Loan Agreement), 4.20 (Affirmative Action and Prevailing Wage),
4.21 (Mandatory Prepayment), 5.01 (Events of Default), 5.02 (Remedies), 5.03
(No
Duty to Mitigate), 5.04 (Remedies), 5.06 (Agreement to Pay Attorney’s Fees and
Expenses), 5.07 (No Additional Waiver), 5.08 (Specific Performance), 7.01
(Notices), 7.02 (Amendments), 7.03 (Expenses and Fees), 7.11 (Assignment
of
Lending Documents), and 7.12 (Further Assurances and Corrective Instruments).
These Reserved Rights have been assigned to the Trustee but are also held
and
retained by the Authority concurrently with the Trustee and may be exercised
and
enforced by the Authority, whether or not the Trustee shall have exercised
or
shall have purported to exercise such rights and remedies, without limiting
the
obligation or the right of the Trustee to do so.
"State"
means the State of New Jersey.
"Subcontractor"
shall mean any Person engaged by a Contractor or a Subcontractor in the
performance of any Construction Contract.
"Substantial
User" means a substantial user within the meaning of Section 147(a)(1) of
the
Code.
"Tender
Agent" shall have the meaning ascribed to that term in the
Indenture.
"Term"
when used with reference to this Loan Agreement, means the term of this Loan
Agreement determined as provided in Section 2.06 hereof.
"Trustee"
means The Bank of New York and its successors hereafter appointed in the
manner
provided in the Indenture.
"Underwriters"
means ▇.▇. ▇▇▇▇▇▇▇ & Sons, Inc., UBS Securities LLC and Wachovia Bank,
National Association.
"Yield"
shall mean a yield as shall be determined under Sections 1.148-4 and 1.148-5
of
the Regulations, as applicable.
"Yield
Reduction Payments" means payments made to the United States with respect
to any
Nonpurpose Investment allocated to the Bonds that (i) are paid at the same
time
and the same manner as Rebate Amounts are required to be paid and (ii)
are paid
with respect to Investments that are allocable to Gross Proceeds that previously
qualified for a temporary investment period that has since expired.
Section
1.2. Interpretation
and Construction.
In this
Loan Agreement, unless the context otherwise requires:
(a) The
terms
"hereby", "hereof ", "hereto", "herein", "hereunder" and any similar terms,
as
used in this Loan Agreement, refer to this Loan Agreement, and the term
"hereafter" means after, and the term "heretofore" means before, the date
of
original delivery of this Loan Agreement.
1011002.2
10
(b) Words
importing a particular gender mean and include correlative words of every
other
gender and words importing the singular number mean and include the plural
number and vice versa.
(c) Words
importing persons mean and include firms, associations, partnerships (including
limited partnerships), trusts, corporations and other legal entities, including
public or governmental bodies, as well as natural persons.
(d) Any
headings preceding the texts of the several Articles and Sections of this
Loan
Agreement, and any table of contents or marginal notes appended to copies
hereof, shall be solely for convenience of reference and shall not constitute
a
part of this Loan Agreement, nor shall they affect its meaning, construction
or
effect.
(e) All
approvals, consents and acceptances required to be given or made by any person
or party hereunder shall not be withheld unreasonably.
(f) All
notices to be given hereunder shall be given in writing and, unless a certain
number of days is specified, within a reasonable time.
(g)
If any
clause, provision or Section of this Loan Agreement shall be ruled invalid
by
any court of competent jurisdiction, the invalidity of such clause, provision
or
Section shall not affect any of the remaining provisions
hereof.
1011002.2
11
ARTICLE
II
THE
LOAN
Section
2.01. Lending
Clauses.
(a)
Subject to the conditions and in accordance with the terms of this Loan
Agreement, (i) the Authority shall make the Loan to the Borrower in the amount
of $25,000,000 from the proceeds of the sale of the 2006 Bonds to finance
the
cost of the Project, and (ii) the Borrower shall borrow from the Authority
said
amount.
(b) The
Loan
shall be made at the time of delivery of the 2006 Bonds. As and for the Loan
the
Authority shall deposit the proceeds of the 2006 Bonds as follows:
(i) proceeds
in an amount equal to accrued interest, if any, on the 2006 Bonds shall be
deposited in the Bond Fund; and
(ii) all
remaining proceeds of the 2006 Bonds shall be deposited into the Construction
Fund as provided in Section 3.02 hereof.
Such
proceeds shall be held, invested, and disbursed as provided herein and in
the
Indenture on the terms and conditions therein prescribed.
(c) To
secure
the Loan and any additional loans, the Borrower shall execute and deliver
non-negotiable Medium Term Notes pursuant to the terms and conditions below.
The
form and nature of the Medium Term Notes to be delivered by the Borrower
are set
forth or described in Exhibit
A
attached
hereto and the Medium Term Notes shall be in substantially such form, with
such
variations in principal amounts, interest rates, interest payment and maturity
dates and prepayment or redemption provisions as may be necessary to correspond
to such provisions of the Bonds attributable thereto and issued by the
Authority.
The
Medium Term Notes shall:
(i) be
payable to the Trustee, as the assignee of the Authority, registered in the
name
of the Trustee and be non-transferable except to a successor
Trustee;
(ii) be
issued
in a principal amount equal to the principal amount of the 2006 Bonds (for
the
Initial Medium Term Note) or any Additional Bonds (for any additional Medium
Term Notes) (the "Related Bonds");
(iii) provide
for
payments of interest equal to the payments of interest on the Related Bonds,
except that the Borrower shall receive a cash credit against its interest
obligations equal to (i) accrued interest on the Related Bonds deposited
with
the Trustee at the time of issuance of the Related Bonds and (ii) such other
moneys held at the time of such interest or Bond Payment Date by the Trustee
in
the Bond Fund and available for the payment of interest on such Related
Bonds;
1011002.2
12
(iv) require
payments of principal, or principal plus, if applicable, a premium and purchase
price, corresponding to such payments on the Related Bonds;
(v) contain
redemption provisions, or provisions in respect of the acceleration or
prepayment of principal and premium, if any, equivalent to the redemption
provisions of the Related Bonds; and
(vi) require
all
regularly scheduled payments on such Medium Term Notes to be made no later
than
the date on which a corresponding payment is due on the Related
Bonds.
Section
2.02. Payment
of Loan.
(a)
Principal on the Loan and any additional loan shall be paid by the Borrower
on
the dates and in the amounts provided in the 2006 Bonds or any Additional
Bonds.
Interest on the unpaid balance of the Loan shall be payable at the times
stated
in the 2006 Bonds or any Additional Bonds at the interest rates per annum
as
provided or referred to therein. Notwithstanding any provisions of the Medium
Term Notes, the obligation of the Borrower to make payments equal to the
Authority’s obligations on the Bonds and under the Indenture, as set forth in
paragraphs (a) through (f) of this Section 2.02 inclusive, shall survive
until
all payments under the Bonds and the Indenture have been paid or discharged.
Payments on the Medium Term Notes will be allocated to those Funds created by
the Indenture, as set forth in the Indenture.
(b) Payments
on the Loan under this Section shall be sufficient to pay the total amount
of
interest or interest and principal and, if applicable Redemption Price and
purchase price, payable on the Bonds on the next succeeding Payment Date.
If,
for any reason, amounts paid to the Trustee by the Company hereunder or under
the Medium Term Notes, together with other moneys held by the Trustee and
then
available, would not be sufficient to make payments of principal or Redemption
Price of, and interest on, the Bonds when such payments are due, the Borrower
shall immediately pay the amounts required from time to time to make up any
such
deficiency.
(c) The
Borrower shall have the option to make or cause to be made payments designated
as and representing advance loan payments on the Medium Term Notes under
and
pursuant to the procedure set forth in Section 2.05 hereof to the Trustee
for
deposit in the Bond Fund in accordance with the Indenture and the redemption
provisions of the Bonds. Such payments shall not in any way alter or suspend
any
obligations of the Borrower under the terms of this Loan Agreement except
to the
extent that such payments shall result in a credit against payments hereunder
or
on the Medium Term Notes as provided in this Section or the retirement of
principal amounts of the Bonds pursuant to the provisions thereof. Payments
made
pursuant to this Section 2.02(c) shall be applied as provided in Section
2.05
hereof.
1011002.2
13
(d) Other
than advance loan payments on the Medium Term Notes pursuant to Section 2.02(c),
which shall be applied as set forth or referred to therein, any amount at
any
time held in the Bond Fund by the Trustee shall (to the extent available
therefor) be credited against the next succeeding payment hereunder or on
the
Medium Term Notes that are to be paid to the Bond Fund and shall reduce the
payment required to be made by the Borrower to the extent such amount is
not
required for the payment of the Bonds as set forth in Section 404 of the
Indenture or principal portions thereof theretofore matured or called for
redemption and past due interest in all cases where such Bonds have not been
presented for final payment. If at any time, the amount held by the Trustee
in
the Bond Fund shall be sufficient to pay at the times required the principal
or
Redemption Price, if applicable, of and interest on the Bonds then remaining
unpaid, the Borrower shall not be obligated to make any further payments
under
the foregoing provisions.
(e) If
the
Borrower should fail to make any of the payments when due under the foregoing
provisions of this Section, the item or installment so in default shall continue
as an obligation of the Borrower until the amount in default shall have been
fully paid, and the Borrower agrees to pay the same with interest thereon
at the
relevant rate per annum on the Related Bonds until paid.
(f) Any
additional loan shall be made at the time of delivery of Additional Bonds
and
receipt of payment therefor by the Authority, against receipt by the Authority
of the documents required as a condition of the issuance of Additional Bonds.
The Authority shall deposit the proceeds of any Additional Bonds as shall
otherwise be provided for in a resolution of the Authority, except that proceeds
in an amount equal to accrued interest, if any, shall be deposited into a
particular Fund created at such time by the Indenture, as amended and
supplemented. Such proceeds shall be held, invested and disbursed as provided
herein and in the Indenture on the terms and conditions therein
prescribed.
(g) At
the
time any Bonds cease to be Outstanding (other than by reason of the payment
of
Medium Term Notes or by reason of the payment of principal of or interest
on the
Bonds by the Insurer and other than those Bonds in lieu of or in exchange
or
substitution for which other Bonds shall have been authenticated and delivered),
the Authority shall cause the Trustee to surrender to the Note Trustee a
corresponding principal amount of Medium Term Notes related to the Bonds
that
cease to be Outstanding bearing interest at the same rate and maturing on
the
same date as such Bonds.
Payments
of principal of or premium, if any, or interest on, the Bonds with moneys
held
under the Indenture for such payment shall be deemed to be like payments
with
respect to the Medium Term Notes. Whenever payment or provision therefor
has
been made in respect of the principal of or premium, if any, or interest
on all
or any portion of the Bonds in accordance with the Indenture (whether at
maturity or upon redemption or acceleration), the Medium Term Notes shall
be
deemed paid to the extent such payment or provision therefor has been made
and
is considered to be a payment of principal, premium or interest on the Bonds.
If
the Bonds or any portion thereof are thereby deemed paid in full, Medium
Term
Notes in a principal amount equal to the principal amount of such Bonds so
deemed to be paid shall be cancelled and returned to the Borrower.
Section
2.03. Other
Amounts Payable.
(a) The
Borrower will pay in immediately available funds to the Tender Agent, on
or
before 12:00 p.m., New York City time, on each day on which a payment of
purchase price of a Bond which has been tendered for optional or mandatory
tender shall become due, an amount which, together with other moneys held
by the
1011002.2
14
Tender
Agent under the Indenture and available therefor, will enable the Tender
Agent
to make such payment in full in a timely manner, provided that the obligation
of
the Borrower to make any payment under this paragraph 2.03(a) on account
of such
tender, shall be deemed to be satisfied and discharged to the extent of the
corresponding payment made by a purchaser of said Bond in connection with
a
remarketing or by a Bank to the Tender Agent under a Standby Purchase Agreement
or by an Obligor on an Alternate Liquidity Facility to the Tender Agent under
such Alternate Liquidity Facility.
(b) Except
as
otherwise permitted by Section 2.10 hereof, the Borrower shall provide for
the
payment of the purchase price of a Bond which has been tendered for optional
or
mandatory tender, by providing a Standby Purchase Agreement or an Alternate
Liquidity Facility, as the case may be, to the Trustee. The Borrower hereby
irrevocably authorizes and directs the Trustee to take such actions as may
be
necessary in accordance with the provisions of the Indenture and a Standby
Purchase Agreement or an Alternate Liquidity Facility to obtain the moneys
necessary to pay the purchase price for Bonds if and when due.
(c) The
Borrower hereby further expressly agrees to pay the reasonable compensation
and
expenses of the Authority, the Trustee, the Tender Agent, the Registrar,
the
Auction Agent and the Paying Agent under the Indenture, including all reasonable
costs and expenses of redeeming the Bonds thereunder.
Section
2.04. Manner
of Payment; Assignment.
(a) The
payments provided for in Section 2.02(a) through (f) hereof shall be paid
in
immediately available funds, in sufficient time to provide for the timely
payment of the Related Bonds, directly to the Trustee for the account of
the
Authority and shall be deposited in the Bond Fund as provided in the Indenture.
The payments due pursuant to Section 2.03(a) shall be paid in immediately
available funds no later than the time specified in Section 2.03(a) directly
to
the Tender Agent and deposited in the Bond Tender Purchase Sub-Account. The
additional payments provided for in Section 2.03(c) shall be paid directly
to
the Trustee or the Authority for its own use or disbursement to the Tender
Agent, Registrar, Auction Agent or the Paying Agents, as the case may
be.
(b) All
payments made by the Borrower with respect to the principal, premium, if
any,
and interest due on the Medium Term Notes shall be assigned to the Trustee
for
payment of its Related Bonds.
(c) The
Borrower agrees that the obligation of the Borrower to make the payments
in
Section 2.02(a) through 2.02(f) and payments to the Tender Agent under Section
2.03(a) hereof and to make the other payments on the Medium Term Notes shall
be
absolute, irrevocable and unconditional and shall not be subject to
cancellation, termination or abatement, or to any defense other than payment,
or
to any right of setoff, counterclaim or recoupment arising out of any breach
under this Loan Agreement or the Indenture or otherwise by the Borrower,
the
Trustee, the Auction Agent, the Tender Agent, the Remarketing Agent, the
Insurer, any Bank, the Agent Bank (or any Obligor on an Alternate Liquidity
Facility and the Agent Obligor on an Alternate Liquidity Facility, as the
case
may be) or any other party, or out of any obligation or liability at any
time
owing to the Borrower by the Authority, the Trustee, the Auction Agent, the
Remarketing Agent, the Insurer, any Bank, the Agent Bank (or any Obligor
on an
Alternate Liquidity Facility and the Agent Obligor on
1011002.2
15
an
Alternate Liquidity Facility, as the case may be) or any other party, or
out of
any failure or inability of the Tender Agent for any reason to realize under
or
upon a Standby Purchase Agreement or an Alternate Liquidity Facility provided
by
the Borrower under Section 2.10 hereof, and, further, that the payments
described in Section 2.02(a) through 2.02(f) and the other payments due
hereunder and on the Medium Term Notes shall continue to be payable at the
times
and in the amounts herein and therein specified whether or not the Project,
or
any use thereof, shall have been destroyed by fire or other casualty, or
title
thereto, or the use thereof, shall have been taken by the exercise of the
power
of eminent domain, and that there shall be no abatement of or diminution
in any
such payments by reason thereof, whether or not the Project, or any of them,
shall be used or useful and whether or not any applicable laws, regulations
or
standards shall prevent or prohibit the use of the Project or for any other
reason.
Section
2.05. Options
to Prepay the Loan or any additional loan.
The
Borrower shall have, and is hereby granted, the option to prepay the Loan
or
any
additional loan
in full
or in part but only in accordance with the redemption provisions of the Medium
Term Notes being so redeemed. With respect to each exercise of its option
to
prepay the Loan or any additional loan by redeeming the Medium Term Notes,
the
Borrower shall deliver a written notice to the Trustee with a copy to the
Authority signed by an Authorized Representative of the Borrower setting
forth
the amount of the redemption payment, the amount of the Bonds requested to
be
redeemed with such payment, and the date of redemption, which date shall
be not
less than thirty-five (35) days from the date the notice is delivered unless
such requirement is waived by the Trustee. In the event that at said time
there
shall have occurred and be continuing an Event of Default, such option to
prepay
the Loan or any additional loan may be exercised only by prepaying the Medium
Term Notes in full. Such payment must be sufficient to provide moneys for
the
payment of interest to accrue to the redemption date and the principal or
Redemption Price, if applicable, in accordance with the terms of the Bonds
Outstanding and to be redeemed with such payment. If such prepayment on the
Medium Term Notes shall be in full, the Borrower shall also pay or provide
for
the payment of all reasonable or necessary fees and expenses of the Authority,
the Trustee, the Tender Agent, the Registrar, the Auction Agent and any Paying
Agent accrued and to accrue through the final payment of the Bonds being
redeemed.
Section
2.06. Effective
Date and Term; Obligation Unconditional.
(a)
This Loan Agreement shall become effective upon its execution and delivery
by
the parties hereto, shall remain in full force from the date of such execution
and delivery and its Term shall commence on said date and, subject to the
provisions hereof (including particularly this Article II, Section 4.07
and
Article V), shall expire at midnight on the date the Bonds and the interest
thereon and all other expenses or sums to which the Authority and the Trustee,
the Tender Agent, the Registrar and any Paying Agent, the Agent Bank, the
Auction Agent, each Bank and each Obligor on an Alternate Liquidity Facility
as
the case may be are entitled, have been fully paid and retired or provision
for
such payment shall have been made as provided in the Indenture. This Loan
Agreement shall remain in full force and effect during the Term.
(b) The
obligation of the Borrower to make the payments as provided in this Loan
Agreement and to maintain the Project in accordance herewith shall be absolute
and unconditional irrespective of any defense or any rights of setoff,
recoupment of counterclaim it might otherwise have against the Authority,
the
Trustee, or any Bondholder. The
1011002.2
16
Borrower
shall not reduce, suspend or discontinue any such payment or terminate this
Loan
Agreement (other than in the manner provided for hereunder) for any cause,
including, without limiting the generality of the foregoing, any acts of
circumstances that may constitute failure of consideration, failure of title,
or
commercial frustration of purpose, or any damage to or destruction of the
Project, or the taking by eminent domain of title to or the right of temporary
use of all or any part of the Project, or any change in the tax or other
laws of
the United States, the State or any political subdivision of either thereof,
or
any failure of the Authority to perform and observe any agreement or covenant,
whether express or implied, or any duty, liability or obligation arising
out of
or connected with this Loan Agreement. The provisions of the first and second
sentences of this paragraph shall apply only if and so long as there shall
be
outstanding and unpaid (or not provided for) any principal and interest on
the
Bonds, and any other amounts owing to the Authority or the Trustee hereunder
adequate provision for the payment of which pursuant to the terms hereof,
including the payment of compensation and expenses of the Authority or the
Trustee, shall not have been made. Furthermore, except to the extent provided
in
the first and second sentences of this paragraph, nothing contained herein
shall
be construed to prevent or restrict the Borrower from asserting any rights
which
the Borrower may have against the Authority under this Loan Agreement or
under
any provision of law.
Section
2.07. Cancellation
at Expiration of Term.
At the
termination or expiration by acceleration or otherwise of the Term and following
full payment of the Bonds and any other amounts owing to the Trustee hereunder,
or provision for payment thereof and of all other fees and charges in accordance
with the provisions of this Loan Agreement, the Indenture and a Standby Bond
Purchase Agreement, or Alternate Liquidity Facility granting the Authority
shall
deliver to the Borrower any documents and take, or cause the Trustee to take,
such actions as may be necessary to effectuate the cancellation of the Medium
Term Notes and evidence the termination of this Loan Agreement.
Section
2.08. Security
Clauses.
In order
to further secure payment of the Medium Term Notes according to their tenor
and
effect and to secure the performance by the Borrower of all of its covenants
in
this Loan Agreement, the Borrower grants to the Authority a first priority
security interest in the Borrower's rights in and to all monies and Investment
Obligations from time to time held in the Bond Fund, the Construction Fund
or
the Liquidity Fund. Anything in the Lending Documents to the contrary
notwithstanding, any amounts held from time to time in the Rebate Fund
are not
pledged to secure the Bonds or available for payment of any sums due under
the
Lending Documents except pursuant to Section 4.04(d) hereof.
Section
2.09. Representations.
The
Borrower hereby represents and warrants that:
(a) The
Borrower has not taken or omitted to take and will not take or omit to
take any
action which action or omission will in any way cause the proceeds from
the sale
of the Bonds to be applied in a manner inconsistent with that provided in the
Indenture and this Loan Agreement.
1011002.2
17
(b) The
Borrower has not taken or omitted to take and will not take or omit to take
any
action and knows of no action that any other person, firm or corporation
has
taken or intends to take, which would cause interest on the Bonds to be
includable in the gross income of the recipients thereof other than "Substantial
Users" and "Related Persons" within the meaning of the Code.
(c) In
its
acquisition and construction of the Project, the Borrower will comply in
all
material respects, and will use, its best efforts to cause the compliance
by its
Contractors, Subcontractors and agents, with applicable laws, rules, orders
and
regulations regarding equal opportunity, minimum wages and other similar
employment practices.
(d) The
availability of financial assistance from the Authority as provided in this
Loan
Agreement and in the Indenture has been an important inducement in the
Borrower's ability to provide the local furnishing of natural gas and the
lower
interest rate available from the Loan will ultimately be passed on to consumers
as a result of reduced capital costs of the Borrower.
(e) No
expenses for supervision by employees of the Borrower or any officers or
employees of any Related Person to the Borrower or Substantial User or Related
Person and no expenses for work done by any of the foregoing persons or entities
financed with the proceeds of the Bonds have been included in the cost
thereof.
(f) The
Project is included within the definition of a "project" in the Act. The
Borrower intends to operate the Project or cause the Project to be operated
as
an authorized "project" under the Act during the Term of this Loan
Agreement.
(g) The
operation of the Project in the manner as described in this Loan Agreement
and
in the Application will not conflict in any material respect with any zoning,
water or air pollution or other ordinance, order or regulation applicable
thereto, and the Project has been designed in accordance with and will
comply in
all material respects with all applicable federal, State and local laws
and
ordinances (including rules and regulations) relating to zoning, building,
safety and environmental quality.
(h) The
acquisition and construction of the Project, which is being financed with
the
proceeds of the 2006 Bonds commenced subsequent to sixty (60) days prior
to July
12, 2005, the date upon which the Authority adopted the Preliminary Resolution,
and prior to such date neither the Borrower nor any Related Person to the
Borrower commenced or caused to be commenced any offsite production or
entered
into an agreement binding the Borrower or any Related Person to the Borrower
to
proceed with the Project, except as set forth in the Application.
(i) No
Person
(or any Related Person to such Person), who was a Substantial User of the
Project at any time during the five (5) year period immediately preceding
July
12, 2005, and who received, directly or indirectly, proceeds of the 2006
Bonds
in an amount equal to five per centum (5%) or more of the face amount of
such
Bonds, in payment for his interest in the Project, was a Substantial User
of the
Project or a Related Person to a Substantial User of the Project, at any
time
during the five (5) year period beginning on the day of issue of the 2006
Bonds.
1011002.2
18
(j) The
entire Project was not acquired or placed in service by the Borrower (determined
in accordance with the provisions of former Treasury Regulation Section
1.103-8(a)(5)) more than one (1) year prior to the date of issue of the 2006
Bonds.
(k) The
payment of interest or principal on the 2006 Bonds will not be guaranteed
in
whole or in part by the United States (or any agency or instrumentality
thereof); nor will five percent (5%) or more of the proceeds of the 2006
Bonds
be either (A) used in making loans the payment of principal or interest with
respect to which are to be guaranteed (in whole or in part) by the United
States
(or any agency or instrumentality thereof), or (B) invested (directly or
indirectly) in federally insured deposits or accounts (except for investments
in
Investment Obligations for an initial temporary period that is permitted
under
the Code until the proceeds are needed for the Project, or other investments
permitted under Section 148(b)(3)(B) of the Code); nor will the payment of
principal or interest on the 2006 Bonds be otherwise indirectly guaranteed
(in
whole or in part) by the United States (or any agency or instrumentality
thereof).
(1) No
portion of the proceeds of the 2006 Bonds were used to provide any airplane,
skybox or other private luxury box, health club facility, facility primarily
used for gambling, or store the principal business of which is the sale of
alcoholic beverages for consumption off premises.
(m) The
Borrower has not taken or omitted any action, the taking or omission of
which
has caused the Bonds when issued to fail to comply with any applicable
requirements of the Code applicable to bonds issued for the local furnishing
of
gas as set forth in Section 142 of the Code.
(n) Less
than
25% of the proceeds of the Bonds were used (directly or indirectly) for
the
acquisition of land (or an interest therein), and no portion of the proceeds
of
the Bonds were used (directly or indirectly) for the acquisition of land
(or an
interest therein) to be used for farming purposes.
(o) The
Project consists of facilities for the local furnishing of gas within the
meaning of Section 142 (a)(8) of the Code, and the gas is and will be made
available to members of the general public and rates for the furnishing
or sale
of the gas have been established or approved by the Board of Public Utilities
of
the State (the agency having jurisdiction thereof); the Project does not
include
any office space. At least ninety-five (95%) percent of the net proceeds
of the
Bonds will be used to provide facilities for the local furnishing of
gas.
(p) The
facilities financed with the proceeds of the 2006 Bonds will be used as
facilities for the local furnishing of gas.
1011002.2
19
(q) The
average maturity of the 2006 Bonds does not exceed 120 percent of the average
reasonably expected economic life of the facilities comprising the Project
determined in accordance with Section 147(b) of the Code.
(r) No
Untrue Statements.
The
Lending Documents, the Application, or any other document, certificate or
statement furnished to the Trustee or the Authority by or on behalf of the
Borrower do not contain any untrue statement of a material fact or omit to
state
a material fact necessary in order to make the statements contained herein
and
therein not misleading or incomplete. It is specifically represented that
the
Borrower is not a party to any material litigation nor, to the best of its
knowledge, is the subject of any investigation or administrative proceeding
except as disclosed in the Application and the Official Statement. It is
specifically understood by the Borrower that all such material statements,
representations and warranties shall be deemed to have been relied upon by
the
Authority as an inducement to make the Loan and that if any such material
statements, representations and warranties were false at the time they were
made, the Authority may, in its sole discretion, consider any such
misrepresentation or breach of warranty an Event of Default as defined in
Section 5.01 and exercise the remedies provided for in this Loan Agreement
or
redeem the Bonds as set forth in Section 4.21 hereof and as set forth in
paragraph (b) of "Mandatory Redemption" in the Bonds.
(s) Organization,
Powers, etc.
The
Borrower (a) is a regulated public utility company duly organized, validly
existing and in good standing under the laws of the State engaged principally
in
the distribution of natural gas to customers within its service area, (b)
has
the power and authority to own its properties and assets and to carry on
its
business as now being conducted (and as now contemplated by the Borrower)
and
(c) has the power and authority to borrow hereunder, to execute and deliver
the
Lending Documents and to perform all of its obligations under the Lending
Documents.
(t) Execution
of Lending Documents.
The
execution and performance of the Lending Documents by the Borrower (a)
have been
duly authorized by all requisite corporate action, (b) will not violate
in any
material respect any provision of law, rule or regulation, any order of
any
court or other agency of government, or any provision of any charter document
or
the By-Laws of the Borrower and (c) will not violate in any material respect
any
provision of any indenture, agreement or other instrument, or result in
the
creation or imposition of any lien, charge or encumbrance of any nature,
other
than the liens created by this Loan Agreement and the Note
Indenture.
(u) Litigation.
Other
than as disclosed in the Official Statement, there is no action, suit,
or
proceeding at law or in equity or by or before any governmental instrumentality
or other agency now pending or, to the knowledge of the Borrower, threatened
against or affecting it or any of its properties or rights which is likely
to
materially impair the value of the Medium Term Notes or its right to carry
on
business substantially as now conducted (and as now contemplated by the
Borrower) or to materially and adversely affect its financial
condition.
(v) Payment
of Taxes.
The
Borrower has filed or caused to be filed all federal, state and local tax
returns which are required to be filed. The Borrower has paid or caused
to be
paid all taxes as shown on said returns or on any assessment received by
it, to
the extent that such taxes have become due, unless the Borrower is actively
contesting such taxes.
1011002.2
20
(w) No
Defaults.
The
Borrower, to the best of its knowledge, is not in default in the performance,
observance or fulfillment of any of the material obligations, covenants or
conditions contained in any (material) agreement or instrument to which it
is a
party or by which it is bound.
(x) No
Material Adverse Change.
Other
than as disclosed in the Official Statement, there has been no material adverse
change in the financial condition or business of the Borrower from that
reflected in its balance sheet dated December 31, 2005, it being understood
that
the Borrower's business is of a seasonal nature.
(y) Obligations
of the Borrower.
When
executed and delivered by the Borrower, this Loan Agreement and each of the
other Lending Documents will be legal, valid and binding obligations of the
Borrower enforceable against it in accordance with their respective terms,
subject to the qualifications that the enforcement thereof may be limited
by
laws relating to bankruptcy, insolvency or other similar laws affecting
creditors' rights generally and by the availability of equitable remedies.
It is
specifically understood by the Borrower that all such statements,
representations and warranties shall be deemed to have been relied upon by
Authority as an inducement to make the Loan; and that if any such statements,
representations or warranties were false in any material respect at the time
they were made, the Authority or the Trustee may, in their sole discretion,
consider any such misrepresentation an Event of Default under Section 5.01
(f)
of this Loan Agreement.
Section
2.10. Standby
Purchase Agreement; Alternate Liquidity Facility.
Unless
the Bonds bear interest at a Long-Term Rate for a Long-Term Period until
the
Maturity Date or at an Auction Rate, the obligation to purchase or provide
funds
for the purchase of tendered Bonds shall be supported by a Liquidity Agreement
with terms, and from a provider, acceptable to the Insurer. In the event
the
Bonds are secured by a Liquidity Agreement, (a) at its option, the Borrower
may
at any time (with not less than twenty (20) days prior written notice received
by the Trustee and copies of such notice given to the Agent Bank or the
Agent
Obligor on an Alternate Liquidity Facility, as the case may be, and the
Remarketing Agent) for the Bonds (i) provide for the delivery to the Trustee
on
any Business Day of an Alternate Liquidity Facility or (ii) terminate or
allow
the expiration without replacement by an Alternate Liquidity Facility of
the
Standby Purchase Agreement or any Alternate Liquidity Facility then in
effect,
but only if the Borrower shall, on or before the date of delivery of the
Alternate Liquidity Facility (which shall not be later than the effective
date
thereof) or on or before the effective date of the termination or expiration
without replacement by an Alternate Liquidity Facility of the Standby Purchase
Agreement or Alternate Liquidity Facility then in effect, simultaneously
deliver
to the Trustee (which delivery must occur prior to 9:30 a.m., New York,
New York
time, on the effective date of such Alternate Liquidity Facility or such
termination, unless a later time on such date shall be acceptable to the
Trustee):
(1) an
opinion of Bond Counsel stating that the delivery of such Alternate Liquidity
Facility or the termination or expiration without replacement by an Alternate
Liquidity Facility of the Standby Purchase Agreement or the Alternate Liquidity
Facility then in effect (i) complies with the terms hereof and (ii) will
not
adversely affect the Tax-Exempt status of the Bonds;
1011002.2
21
(2) written
evidence from ▇▇▇▇▇’▇, if the Bonds are then rated by ▇▇▇▇▇’▇ and from S&P,
if the Bonds are then rated by S&P, in each case to the effect that such
rating agency has reviewed the proposed Alternate Liquidity Facility or the
proposed termination or expiration without replacement by an Alternate Liquidity
Facility of the Standby Purchase Agreement or Alternate Liquidity Facility
then
in effect, as the case may be, and that the delivery of the proposed Alternate
Liquidity Facility or the proposed termination or expiration without replacement
by an Alternate Liquidity Facility of the Standby Purchase Agreement or the
Alternate Liquidity Facility then in effect will not, by itself, result in
a
reduction, suspension or withdrawal of such rating agency’s short term rating or
ratings of the Bonds; and
(3) written
evidence from the Insurer to the effect that the Insurer has reviewed the
proposed Alternate Liquidity Facility or the proposed termination or expiration
without replacement by an Alternate Liquidity Facility of the Standby Purchase
Agreement or Alternate Liquidity Facility then in effect, as the case may
be,
and finds the same to be acceptable to the Insurer.
(b) The
Borrower may, at its election, but only with the written consent of each
Bank or
each Obligor on an Alternate Liquidity Facility, as the case may be, provide
for
one or more Substitute Standby Purchase Agreements or one or more extensions
of
the Standby Purchase Agreement or Alternate Liquidity Facility then in
effect,
as the case may be, for the Bonds for any period commencing after its
then-current expiration date.
(c) An
assignment or assumption of a Bank’s interest and obligations, or any portion
thereof, under a Standby Purchase Agreement shall be deemed to be the delivery
of an Alternate Liquidity Facility for purposes of Section 2.10(a)
hereof.
(d) Anything
in this Agreement or the Indenture to the contrary notwithstanding, no
Alternate
Liquidity Facility or Substitute Standby Purchase Agreement may be provided
pursuant to this Section 2.10 which does not provide Adequate Interest
Coverage
sufficient to cover the Maximum Rate for the Interest Period then in
effect.
(e) The
Borrower shall, within ninety (90) days of notice of a rating reduction
and in
accordance with the terms of any Standby Purchase Agreement or Alternate
Liquidity Facility then in effect, provide for the delivery to the Trustee
on
any Business Day of an Alternate Liquidity Facility (with not less than
twenty
(20) days’ prior notice provided to the Trustee and the Remarketing Agent), if
the short-term rating or ratings on the Bonds are reduced and maintained
below
VMIG-1 by ▇▇▇▇▇’▇, if the Bonds are then rated by ▇▇▇▇▇’▇ or below A-1 by S
& P, if the Bonds are then rated by S & P, solely as a result of the
Standby Purchase Agreement or Alternate Liquidity Facility then in effect;
provided, however, that such delivery of an Alternate Liquidity Facility
is not
required when the Bonds bear interest at an Auction Rate or a Long-Term
Rate for
a Long-Term Interest Period ending on the day before the Maturity Date.
Any
provider of a Standby Purchase Agreement or Alternate Liquidity Facility
whose
long-term rating falls below A- or A3 from S & P or ▇▇▇▇▇’▇, respectively,
shall be replaced by the Borrower at the request of the
Insurer.
1011002.2
22
Section
2.11. Obligation
to Prepay.
The
Borrower shall be obligated to prepay in whole or in part the amounts payable
hereunder as to the Bonds (or any Additional Bonds) (i) upon a determination
of
taxability (as described in Section 6 of the form of Bonds in the Indenture
under the caption, "Special Mandatory Redemption") or (ii) (a) the Borrower
has
ceased to operate the Project or has caused the Project to be operated as
an
unauthorized project under the Act for twelve (12) consecutive months without
first obtaining the written consent of the Authority, or (b) any representation
or warranty of the Borrower in this Loan Agreement or in any other document
furnished in connection with this Loan Agreement proves to have been false
or
misleading in any material respect when made, by paying an amount equal to,
when
added to other funds on deposit in the Bond Fund, (x) the aggregate principal
amount of the Bonds Outstanding, plus accrued interest to the prepayment
date
plus any premium due upon redemption, plus (y) an amount of money equal to
the
Trustees fees and expenses under the Indenture accrued and to accrue until
such
redemption of such Bonds and any other amounts payable under the Indenture,
plus
(z) an amount of money equal to all sums due to the Authority under this
Loan
Agreement.
At
the time
of any such prepayment of the amounts payable hereunder pursuant to this
Section, the prepayment amount shall be applied, together with other Available
Moneys in the Bond Fund, to the redemption of the Bonds on the date specified
in
the notice as provided in the Indenture, whether or not such date is an Interest
Payment Date, to the Trustee’s fees and expenses under the Indenture accrued to
such redemption of the Bonds, and to all sums due to the Authority under
this
Loan Agreement.
1011002.2
23
ARTICLE
III
THE
PROJECT
Section
3.01. Issuance
of 2006 Bonds.
The
Authority has concurrently with the execution and the delivery hereof sold
and
delivered the 2006 Bonds under and pursuant to the Bond Resolution and the
Indenture. The proceeds of the sale of the 2006 Bonds shall be applied as
provided in Section 2.01 hereof. Moneys in the Construction Fund shall be
disbursed as hereinafter provided and as provided in Section 403 of the
Indenture. The Authority reserves the right to request a record of all
disbursements from and/or investments of the Construction Fund.
Section
3.02. Disbursements
from the Construction Fund.
The
Authority authorizes and directs the Trustee to make disbursements of Bond
Proceeds from the Construction Fund to Persons for work performed on the
Project
or to reimburse the Borrower for any costs and expenses of the Project and
certain costs of issuing the Bonds paid by it. Each disbursement shall
constitute a Proper Charge and shall be disbursed only after delivery (which
may
be by facsimile transmission) to the Trustee of the following:
(a) A
Requisition Form signed by an Authorized Representative of the Borrower.
The
Requisition Form shall state: (i) the requisition number; (ii) the name and
address of the Person to whom payment is to be made by the Trustee or, if
the
payment is to be made to the Borrower for a reimbursable advance, a summary
of
the Borrower's disbursements; (iii) the amount to be paid; (iv) that each
obligation for which payment is sought is a Proper Charge against the
Construction Fund, is unpaid or unreimbursed, and has not been the basis
of any
previously paid requisition; (v) if such payment is a reimbursement to the
Borrower for costs or expenses incurred by reason of work performed or
supervised by officers or employees of the Borrower or any of its affiliates,
that the amount to be paid does not exceed the actual cost thereof to the
Borrower or any of its Affiliates; (vi) that no Event of Default has occurred
and is continuing under this Loan Agreement; and (vii) the Borrower has received
no written notice of any lien, right to lien or attachment upon, or other
claim
affecting the right to receive payment of, any of the moneys payable under
such
Requisition Form to any of the Persons named therein or, if any of the foregoing
has been received, it has been released or discharged or will be released
or
discharged upon payment of the Requisition Form.
(b) Prior
to
the first disbursement from the Construction Fund, either (i) a certificate
of
an Authorized Representative of the Borrower stating that for purposes of
the
Prevailing Wage Requirements and the Affirmative Action Program none of the
moneys disbursed at any time from the Construction Fund will be used to pay
for
work done in performance of any Construction Contract unless prior thereto
there
shall be submitted to the Authority a Contractor's Certificate and Agreement
or
(ii) a Contractor's Certificate and Agreement executed by the Contractor;
and
prior to the initial disbursement from the Construction Fund for any work
done
in the performance of any Construction Contract, if not theretofore furnished,
a
Contractor's Certificate and Agreement.
1011002.2
24
If
the
Authority's Office of Affirmative Action shall notify the Borrower in writing
that the Contractor or a Subcontractor, if any, has not complied with the
requirements of the Affirmative Action Program, there shall be retained in
the
Construction Fund a holdback (a "Holdback") equal to ten per centum (10%)
of
each sum requisitioned for payment or reimbursement for payment of a
Construction Contract with such Contractor or Subcontractor for purposes
of the
Affirmative Action Program after receipt of such written notice from the
Authority, provided, however, if any such requisitioned sum is for reimbursement
of a payment by the Borrower, which payment itself was for only ninety per
centum (90%) of the payment requested by the Contractor or Subcontractor
pursuant to such Construction Contract then such requisitioned sum may be
reimbursed without regard to the aforementioned Holdback but the remaining
ten
per centum (10%), when requisitioned by the Borrower, shall only be disbursed
as
if it had been held back initially in the Construction Fund and such
disbursement thereof shall be subject to all the terms and conditions of
this
Section related to any Holdback. Said Holdback shall be disbursed from the
Construction Fund upon compliance with the terms and conditions of this Section
and either: (A) after completion of the Project (1) the execution and filing
of
the Contractor's Completion Certificate; (2) the execution and filing of
the
Borrower's Completion Certificate; and (3) receipt by the Borrower of a written
notice issued by the Authority's Office of Affirmative Action that the
Contractor and Subcontractors, if any, have complied with the requirements
of
the Affirmative Action Program; or (B) prior to completion of the Project,
receipt by the Borrower of a written notice issued by the Authority's Office
of
Affirmative Action that the Contractor and Subcontractor, if any, have complied
with the requirements of the Affirmative Action Program.
(c) Such
additional documents, affidavits, certificates and opinions as the Authority
or
the Trustee may reasonably require; but the Authority and the Trustee shall
have
no obligation to require any such additional items.
Section
3.03. No
Liability of Authority or Trustee.
Nothing
contained herein or in any documents and agreements contemplated hereby or
in
any other Lending Document shall impose upon the Trustee or the Authority
any
obligation to ensure the proper application of such disbursements by the
Borrower or any other recipient thereof, and, in making such disbursements
from
the Construction Fund, the Trustee may rely on such Requisition Forms and
proof
delivered to it. The Trustee and the Authority shall be relieved of any
liability with respect to making such disbursements in accordance with the
foregoing.
Section
3.04. Establishment
of Completion Date.
Completion of the Project shall be evidenced by delivery to the Authority
and
the Trustee of the Borrower's Completion Certificate signed by an Authorized
Representative of the Borrower stating the date of completion of the Project
and
that, as of such date, except for amounts retained by the Trustee at the
Borrower's direction for any cost of the Project not then due and payable
or, if
due and payable, not then paid: (i) the Project has been completed in all
material respects; (ii) the cost of all labor, services, materials and supplies
used in the Project have been paid, or will be paid from amounts retained
by the
Trustee at the Borrower's direction for any cost of the Project Facilities
not
then due and payable or, if due and payable, not then paid, except for Costs
which the Borrower is contesting in good faith; (iii) the Project Facilities
have been installed to the Borrower's satisfaction, such Project Facilities
so
installed are suitable and sufficient for the efficient operation of the
Project
for the intended purposes and all costs and
1011002.2
25
expenses
incurred in the acquisition and installation of such equipment have been
paid,
or will be paid from amounts retained by the Trustee at the Borrower's direction
for any cost of the Project not then due and payable or, if due and payable,
not
then paid; (iv) the Project is being operated as an authorized "project"
under
the Act and substantially as proposed in the Application; and (v) the Borrower
has required in all Construction Contracts that wages paid to workers employed
in the performance of such Construction Contracts be paid, or determined
that
such workers were paid, at a rate not less than the Prevailing Wage Rate.
Upon
receipt of such certificate by the Trustee, the Borrower shall direct the
Trustee in writing to transfer any amounts remaining in the Construction
Fund
(except for amounts therein sufficient to cover Costs of the Project not
then
due and payable or not then paid or the Holdback required to be retained
in the
Construction Fund pursuant to Section 3.02 hereof unless the requirements
set
forth in Section 3.02 hereof for the disbursement of the Holdback from the
Construction Fund have been satisfied) to the Optional Redemption Subaccount
of
the Bond Fund. Amounts transferred into the Optional Redemption Subaccount
of
the Bond Fund hereunder shall be used to redeem the Bonds on the next succeeding
redemption date on which such Bonds can be redeemed without penalty or premium,
pursuant to the Indenture provided that any amount in excess of the Authorized
Denomination shall be applied to pay interest accrued on the Bonds on such
redemption date. Amounts transferred to and held in the Optional Redemption
Subaccount shall not be invested at a Yield materially higher than the Yield
on
the Bonds.
Section
3.05. Borrower
Required to Pay if Construction Fund Insufficient.
In the
event the moneys in the Construction Fund available for payment of the Costs
of
the Project are not sufficient to pay all Costs of the Project in full, the
Borrower agrees to complete the Project and to pay that portion of the Costs
of
the Project in excess of the moneys available therefor in the Construction
Fund.
The Authority and the Trustee make no warranty, either express or implied,
that
the moneys paid into the Construction Fund and available for payment of the
Costs of the Project will be sufficient to pay all of such Costs. The Borrower
agrees that if, after disbursement of all the money in the Construction Fund
available for payment of Costs of the Project, the Borrower should pay any
portion of the Costs of the Project pursuant to the provisions of this Section,
it shall not be entitled to any reimbursement therefor from the Authority
or the
Trustee.
Section
3.06. Issuance
of Additional Bonds.
(a)
Subject to the Borrower being then in compliance with the provisions of
this
Loan Agreement, the Authority may authorize and issue Additional Bonds
for the
purposes herein stated and upon the terms and conditions stated in the
Indenture. Additional Bonds shall be issued, if and to the extent permitted
by
the Act.
(b) If
the
Borrower is not in default hereunder, the Authority will, on written request
of
an Authorized Representative of the Borrower, from time to time, use its
best
efforts to issue Additional Bonds in aggregate amounts as requested by
the
Borrower, but only if (i) the terms of such Additional Bonds, the purchase
price
to be paid therefor and the manner in which the proceeds therefrom are
to be
disbursed shall have been approved in writing by the Borrower; (ii) the
Borrower
and the Authority shall have entered into a supplement to this Loan Agreement
reaffirming (in material respects) the representations and covenants of
the
Authority and the Borrower herein contained, describing the completion,
1011002.2
26
restoration,
additions, extensions, improvements or facilities, if any, to be acquired
and
constructed or performed, (iii) the Borrower shall have delivered to the
Authority, as evidence of the additional amounts due under this Loan Agreement,
a supplemental Note Indenture and additional Medium Term Notes satisfying
the
relevant requirements of Section 2.01 hereof in an amount sufficient to pay,
as
and when the same matures and becomes due, the principal or Redemption Price,
if
applicable, of and interest on such Additional Bonds, (iv) the Authority
shall
have duly adopted a supplemental Bond Resolution authorizing the issuance
of
such Additional Bonds and setting forth the terms thereof and describing
or
otherwise identifying any real or personal property to be security therefor,
(v)
the Authority and the Trustee shall have entered into a Supplemental Indenture,
and (vi) the Authority shall have otherwise complied with the provisions
of the
Indenture and the Act with respect to the issuance of such Additional
Bonds.
Section
3.07. Preservation
of Corporate Existence, Business and Property.
Except
as permitted in Section 4.15 hereof, the Borrower will at all times preserve
and
maintain its corporate existence, rights, privileges and franchises, necessary
to conduct its existing line of business as a gas utility and will preserve
and
protect its property used or useful in the conduct of its business and will
keep
such property in good repair, working order and condition, and from time
to time
will make, or will cause to be made, all needed and proper repairs, renewals,
replacements, betterments and improvements thereto.
Section
3.08. Insurance
Required.
(a) The
Borrower agrees that it will at all times carry such insurance covering the
Project as is required by the Mortgage Indenture or the Substitute Mortgage,
in
the event the Mortgage Indenture shall terminate, or if the initial Mortgage
Indenture is not replaced with a Substitute Mortgage, the Borrower will carry
insurance in accordance with industry standards, including but not limited
to
insurance covering the Project and the Utility Property (as defined in the
Note
Indenture). The Borrower will promptly notify the Trustee in writing of any
instance where any of the insurance policies required to be maintained by
the
Mortgage Indenture (or the Substitute Mortgage) is not in full force and
effect.
(b) In
addition to the foregoing, the Borrower will at a minimum, maintain general
comprehensive liability insurance against claims for bodily injury, death
or
property damage (such coverage to include provisions waiving subrogation
against
the Authority) in amounts not less than $1,000,000 with respect to bodily
injury
to any one person, $1,000,000 with respect to bodily injury to two or more
persons in any one accident and $1,000,000 with respect to property damage
resulting from any one occurrence, naming the Authority as an additional
insured.
(c) Each
insurance policy obtained in satisfaction of the requirements of this Section
3.08:
(i) shall
be by
such insurer (or insurers) as shall be financially responsible, qualified
to do
business in the State and of recognized standing;
(ii) shall
be in
such form and have such provisions as are generally considered standard
provisions for the type of insurance involved;
1011002.2
27
(iii) shall
prohibit cancellation or substantial modification, termination or lapse in
coverage by the insurer without at least 30 days prior written notice to
the
Authority.
(d) At
all
times during the term of this Loan Agreement, the Borrower shall comply with
the
laws of the State relating to workers compensation with respect to the
Project.
(e) Each
insurance policy maintained pursuant to this Section shall contain a provision
that such policy shall not be cancelled unless the Trustee is notified in
writing at least fifteen (15) days prior to such cancellation. The Borrower
shall promptly notify the Trustee in writing of any instance where any of
the
insurance policies required to be maintained by this Loan Agreement are not
still in force and effect.
(f) In
the
event the Borrower shall fail to maintain the insurance coverage required
by
this Loan Agreement, the Authority or the Trustee may (but shall be under
no
obligation to), after ten (10) days written notice to the Borrower, contract
for
the required policies of insurance and pay the premiums on the same and the
Borrower agrees to reimburse the Authority or the Trustee to the extent of
the
amounts so advanced, with interest thereon at the maximum rate permitted
by law.
Section
3.09. General
Requirements Applicable to Insurance.
(a)
Prior to expiration of any policy required to be maintained under Section
3.08,
the Borrower shall furnish the Authority and the Trustee with evidence
satisfactory to the Authority and the Trustee that the policy or certificate
has
been renewed or replaced in compliance with this Loan Agreement or is no
longer
required by this Loan Agreement.
(b) Upon
request therefor, the Borrower shall furnish the Authority and the Trustee
with
copies of any policy requested and proof of the coverages required under
Section
3.08 above.
(c) In
the
event the Borrower shall fail to maintain the insurance coverage required
by
this Loan Agreement, the Authority or the Trustee may (but shall be under
no
obligation to), after ten (10) days written notice to the Borrower unless
cured
within such ten (10) days, contract for the required policies of insurance
and
pay the premiums on the same and the Borrower agrees to reimburse the Authority
or the Trustee to the extent of the amounts so advanced with interest thereon
at
the maximum rate permitted by law.
Section
3.10. Payment
of Taxes, etc.
The
Borrower will timely pay and discharge or cause to be timely paid and discharged
all taxes, assessments and governmental charges or levies imposed upon
it or in
respect of any of its property and assets as provided in, and except as
permitted under, the Note Indenture. Notwithstanding the foregoing, the
Borrower
may, at its expense and in its own name and behalf, in good faith, contest
any
such taxes, assessments and other charges and, in the event of any such
contest,
may permit such taxes, assessments or other charges so contested to remain
unpaid during the period of such contest and any appeal therefrom; provided
further that
during such period enforcement of such contested item is effectively stayed,
unless by nonpayment of any such items the lien of the Indenture as to
the
amounts payable hereunder will be materially endangered, in which event
the
Borrower shall promptly pay and cause to be satisfied and discharged all
such
unpaid items. The Authority will reasonably cooperate with the Borrower
in any
such contest.
1011002.2
28
Section
3.11. Compliance
with Applicable Laws.
The
Borrower agrees to construct, operate and maintain the Project in accordance
with all applicable Federal, State, county and municipal laws, ordinances,
rules
and regulations now in force or that may be enacted hereafter including,
but not
limited to such environmental protection, workers' compensation, sanitary,
safety, non-discrimination and zoning laws, ordinances, rules and regulations
as
shall be binding upon the Borrower, except where the failure to so comply
will
not have a material adverse effect upon the Borrower's operations or the
Borrower's financial condition.
Section
3.12. Covenant
with Respect to the Insurer.
The
Borrower agrees that, so long as any of the Bonds remain Outstanding, it
will
deliver to the Insurer, as soon as practicable, and in any event within one
hundred twenty (120) days after the end of each fiscal year, its annual audited
financial statements, prepared in accordance with generally accepted accounting
principles, consistently applied. In addition, from time to time (a) official
statement or other disclosure material, if any, prepared in connection with
the
issuance of additional Medium Term Notes or debt, whether or not such debt
is on
parity with the Bonds, in case within 30 days after the sale thereof; (b)
notice
of the redemption, other than mandatory sinking fund redemption, of any of
the
Bonds, including the principal amount, maturities and CUSIP numbers thereof;
and
(c) any additional information the Insurer may reasonably request from time
to
time. The Borrower will permit the Insurer to discuss the affairs, finances
and
accounts of the Borrower or any information the Insurer may reasonable request
regarding security for its obligations under the Lending Documents and otherwise
in respect of the Bonds with appropriate officers of the Borrower. The Borrower
will also permit the Insurer to have access to and make copies of all books
and
records relating to such obligation at any reasonable time. The Insurer agrees
to maintain in confidence and not to disclose without the Company’s consent
(other than to its employees, directors, auditors, counsel and other
professional advisors, with respect to each of whom Insurer shall also be
bound
by this Section 3.12) any information concerning the Company furnished pursuant
to this Loan Agreement and identified as confidential by the party so furnishing
such information; provided that
Insurer may disclose any such information (a) that has become generally
available to the public, (b) if required or appropriate in any report, statement
or testimony submitted to any regulatory body having jurisdiction over Insurer,
(c) if required or appropriate in respect to any summons or subpoena or in
connection with any litigation or other legal proceeding, (d) in order to
comply
with any law, order, regulation or ruling applicable to Insurer, or (e) to
(1)
reinsurers that are considering participating in the transactions contemplated
by this Loan Agreement, and (2) any ratings agencies involved in rating the
Bonds or the claims paying ability of Insurer (it being understood that such
reinsurers and ratings agencies shall be informed by Insurer of the confidential
nature of such information and shall be directed by Insurer to treat such
information confidentially and not to use the information other than in
evaluating the Bonds or Insurer); provided that
in
the case of any disclosure under subsection (c) above, Insurer shall, unless
prohibited by law, order, regulation or ruling from doing so, notify the
Company
of such disclosure so that the Company may seek an appropriate protective
order.
1011002.2
29
Section
3.13. Financial
Statements.
The
Borrower shall deliver to the Authority (upon its request), the Trustee and
the
Insurer not later than one hundred twenty (120) days after the end of each
Fiscal Year, audited financial statements of the Borrower (consisting of
a
balance sheet, statement of operations (income statement), and statement
of cash
flows) for the Fiscal Year then ended prepared in accordance with generally
accepted accounting principles, consistently applied (except to the extent
otherwise described therein). In addition, the Borrower will deliver to the
Insurer filings with the Securities and Exchange Commission, made by it or
its
corporate parent promptly upon those filings being made, other than pursuant
to
Section 16 of the Securities Exchange Act of 1934, as amended.
Section
3.14. Transfer
of Project Facilities.
The
Borrower shall not sell or otherwise dispose of any possessory interest in
whole
or part of the Project Facilities without complying with the provisions of
Section 4.15.
Section
3.15. Cost
Recovery. To
the
extent that any property is financed by the Bond Proceeds, the cost recovery
deduction allowed for such property shall be determined by using the alternative
depreciation system determined in accordance with Section 168(g) of the
Code.
Section 3.16. Covenant
by Company as to Compliance with Indenture.
The
Borrower covenants and agrees that it will not interfere with the exercise
of
the power and authority granted to the Trustee in the Indenture, except as
provided therein. The Borrower further agrees to aid in furnishing to the
Authority or the Trustee any documents, certificates or opinions that may
be
required under the Indenture and to comply with the provisions thereof to
the
extent applicable to the Borrower, including without limitation any payments
due
to the Insurer pursuant to Section 219 of the Indenture.
Section
3.17. Investment
of Bond Fund and Rebate Fund Moneys.
Any
monies held as a part of the Bond Fund, the Construction Fund or the Rebate
Fund
shall be invested or reinvested by the Trustee in accordance with this Agreement
and the Indenture.
The
Borrower shall direct investments of amounts in the Funds so that such
Investment Obligations shall mature in such amounts and at such times or
shall
be redeemable by the Trustee at such times as may be necessary to provide
funds
when, at the time of the investment, it is anticipated the same will be needed
to make payments from the Funds in accordance with the provisions of Section
407
of the Indenture. To the extent required for payments from the Funds, the
Trustee may, at any time, sell any of such Investment Obligations. The proceeds
of any such sale, all payments at maturity and all payments upon redemption
of
such Investment Obligations shall be held in the respective Funds in which
such
investment income was derived and, as to the Construction Fund accounted
for
separate and apart from the proceeds from the sale of the Bonds.
Interest
and other income received on Investment Obligations in the Construction Fund
shall, within the later of (i) three (3) years from the date of issuance
of the
Bonds or (ii) one (1) year after receipt of such investment income, be used
by
the Borrower to pay interest accruing on the Bonds during the construction
period or otherwise spent on other costs of
1011002.2
30
the
Project as directed by Requisition by the Borrower. In making such investments
as described in this Section, the Trustee may rely upon the written direction
of
the Borrower as to the investment purchased and shall be and hereby is
relieved
of all liability with respect to making, redeeming and selling such investments,
so long as the Trustee has acted in accordance with the foregoing
directions.
The
Borrower shall be entitled to receive from the Trustee annually and at such
other times as the Borrower may reasonably request, a statement of account
of
any moneys held in the Funds by the Trustee.
1011002.2
31
ARTICLE
IV
PARTICULAR
COVENANTS
Section
4.01. Access
to the Project and Inspection.
The
Trustee, the Insurer and the Authority and their duly authorized agents shall
have the right, at all reasonable times upon the furnishing of reasonable
notice
to the Borrower under the circumstances, to enter upon the Project Facilities
and to examine and inspect the Project Facilities; provided, however, that
this
right is subject to federal and state laws and regulations applicable to
the
sites of the Project. The Borrower hereby covenants to execute, acknowledge
and
deliver all such further documents, and do all such other acts and things
as may
be necessary to grant to the Authorized Representative of the Authority,
the
Insurer and the Trustee such right of entry. The rights of inspection and
access
hereby reserved to the Trustee, the Insurer and the Authority may be exercised
only after such entity shall have executed release of liability and secrecy
agreements if required by the Company in the form then currently used by
the
Company, and nothing contained in this Section 4.01 or in any other provision
of
this Loan Agreement shall be construed to entitle the Authority, the Trustee
or
the Insurer to any information or inspection involving trade secrets or other
proprietary information (other than historical financial information of the
Company). Until payment of the Bonds shall have occurred, the Borrower shall
promptly, from time to time, deliver to the Authority such information and
materials relating to the Project and information and materials required
under
the Continuing Disclosure Agreement relating to the Borrower as the Authority
may reasonably request. An
Authorized Representative of the Authority, the Insurer and the Trustee shall
also be permitted, at all reasonable times, to examine the books and records
of
the Borrower with respect to the Project Facilities and the obligations of
the
Borrower hereunder, but none of them shall be entitled to access to trade
secrets or other proprietary information (other than financial information)
of
the Borrower.
Section
4.02. Further
Assurances and Corrective Instruments.
Subject
to the provisions of the Indenture, the Authority and the Borrower each agrees
that it will, from time to time, execute, acknowledge and deliver, or cause
to
be executed, acknowledged and delivered, such supplements and amendments
hereto
and such further instruments as may reasonably be required for carrying out
the
intention or facilitating the performance of this Loan Agreement. All such
supplements, amendments and further instruments shall require the approval
of
the Authority.
Section
4.03. Recording
and Filing; Other Instruments.
(a) The
Borrower covenants that it will, at its expense, take all steps as are
reasonably necessary to provide that all financing statements, continuation
statements, notices and other instruments required by applicable law shall
be
recorded or filed or re-recorded or re-filed in such manner and in such places
required by law in order fully to preserve and protect the rights of the
Trustee
in the granting by the Authority and the Borrower of certain rights of the
Authority
and the Borrower, pursuant to the Indenture, under this Loan Agreement, the
Medium Term Notes and the Pledged Bonds.
1011002.2
32
(b) The
Borrower and the Authority shall execute and deliver all instruments and
shall
furnish all information and evidence deemed necessary by the Borrower or
advisable by its counsel and the Borrower shall file and re-file and record
and
re-record or cause to be filed and re-filed and recorded and re-recorded
all
instruments required to be filed and re-filed and recorded or re-recorded
pursuant to the opinion of its Counsel or Counsel employed by the Authority
or
the Trustee to perfect all security interests created pursuant to the terms
of
this Loan Agreement and the Indenture and shall continue or cause to be
continued the liens of such instruments for so long as the Bonds shall be
Outstanding, except as otherwise required by this Agreement. Neither, the
Authority nor the Trustee shall have any responsibility for such filings
or
refilings whatsoever, other than executing and delivering the documents
requested by the Borrower.
Section
4.04. Compliance
with Code, Arbitrage and Rebate Regulations.
(a) The
Borrower shall at all times do and perform all acts and things necessary
or
desirable in order to assure that interest paid on the Bonds shall, for the
purposes of Federal income taxation (except that the interest on the Bonds
is
subject to the Federal alternate minimum tax ("AMT")), be excludable from
the
gross income of the recipients thereof and exempt from such taxation, except
in
the event that such recipient is a Substantial User or Related Person to
a
Substantial User. The Borrower shall direct all investments of the Gross
Proceeds of the Bonds. The Borrower shall direct the Trustee to make investments
of amounts in the Construction Fund only at market prices within the meaning
of
Treasury Regulations Section 1.148-1. For purposes of this Section, any and
all
actions of any Principal User of the Project or any Related Person to any
such
Principal User shall be deemed to be actions of the Borrower. In addition,
any
and all actions to be undertaken by the Borrower or by any other Person as
to
which the Authority or the Trustee must, pursuant to the terms hereof, consent
or approve in advance, shall be deemed to be the actions of the Borrower
or such
other Person (and not the actions of the Authority or the Trustee).
(b) The
Borrower shall not permit at any time or times any of the Gross Proceeds
from
the sale of the Bonds or other of its funds to be used, directly or indirectly,
to acquire any Investment Property (within the meaning of Section 148(b)(2)
of
the Code) the acquisition of which would cause the Bonds to be "arbitrage
bonds"
for the purposes of Section 148 of the Code. The Borrower shall utilize the
Bond
Proceeds from the sale of the Bonds so as to satisfy the reasonable expectations
of the Borrower set forth in the Tax Certificate dated the Closing Date of
the
Borrower furnished to Bond Counsel and the Authority.
(c) The
Borrower shall use the Net Proceeds of the Bonds to construct the Project
Facilities in the manner and as specifically set forth in the Tax Certificate
furnished to Bond Counsel and the Authority. The Borrower shall not expend
the
Bond Proceeds on assets other than those listed in the Tax Certificate without
the express written consent of Bond Counsel.
(d) The
Borrower will provide a written certification to the Authority and the Trustee
indicating whether the Borrower complied with the six-month or eighteen month
1011002.2
33
exceptions
to the arbitrage rebate requirement set forth in Section 148(f)(4)(B) of
the
Code as are set forth in paragraph (o) below and that, as a consequence,
the
obligation to pay any Rebate Amount with respect to Bonds has been
satisfied.
(e) Unless
the Borrower has complied with the six-month rebate exception or the eighteen
month exception to the rebate requirement in Section 148(f)(4)(B) of the
Code,
as are set forth in paragraph (o) below, the Borrower will retain a Rebate
Expert, on or no later than 30 days before the Initial Rebate Computation
Date
(as defined below) and on each rebate Computation Date thereafter, (A) to
compute the Rebate Amount (as described below) with respect to the Bonds
for the
period ending on such rebate Computation Date (as described below), (B) to
deliver an opinion to the Authority and Trustee concerning its conclusions
with
respect to the amount (if any) of such Rebate Amount together with a written
report providing a summary of the calculations relating thereto and (C) to
deliver an opinion to the Authority and Trustee that all of the Gross Proceeds
of the Bonds (within the meaning of Section 148(f) of the Code), other than
Gross Proceeds of the Bonds on deposit in a Bona Fide Debt Service Fund (within
the meaning of Section 148(f)(4) of the Code), have been expended on or prior
to
the initial rebate Computation Date. The Computation Date shall include (i)
maturity of the Bonds, (ii) if the Bonds are redeemed prior to maturity,
the
date on which the Bonds are redeemed, (iii) on the first day of the fifth
anniversary date of the Bond Year (the "Initial Rebate Computation Date")
and
each fifth anniversary thereafter, and (iv) any other date that may be required
by the Code.
(f) The
Borrower shall direct the Trustee in writing to rebate the Rebate Amount
to the
United States on behalf of the Authority. The Rebate Amount as of any
Computation Date is the excess of the Future Value of all receipts on Nonpurpose
Investments ("Nonpurpose Receipts") over the Future Value of all payments
on
Nonpurpose Investments ("Nonpurpose Payments"). To the extent amounts received
from Nonpurpose Investments are reinvested, these amounts may be netted against
each other and not taken into account in the computation of the Rebate Amount.
Nonpurpose Receipts and Nonpurpose Payments shall be determined as described
below.
|
(1)
|
Nonpurpose
Payments.
Nonpurpose Payments include actual
payments
(amounts of Gross Proceeds actually or constructively paid to acquire
a
Nonpurpose Investment including Qualified Administrative Costs);
"allocation"
payments
(for a Nonpurpose Investment that is allocated to the Bonds after
already
having been acquired by the Borrower (e.g.,
sinking fund proceeds), an amount equal to the Value of the Investment
on
the allocation date); Computation
Date payments
(for a Nonpurpose Investment allocated to the Bonds at the end
of the
preceding Computation Period, the Value of the Investment at the
beginning
of the Computation Period); Yield
Reduction Payments,
if any; and the
Computation Date credit
equal to $1,000.
|
1011002.2
1011002.2
34
|
(2)
|
Nonpurpose
Receipts.
Nonpurpose Receipts include actual
receipts
(amounts actually or constructively received with respect to a
Nonpurpose
Investment, such as earnings and return of principal, reduced by
Qualified
Administrative Costs); "deallocation"
receipts
(for a Nonpurpose Investment that ceases to be allocated to the
Bonds or
subject to rebate, the Value of the Investment on the "deallocation"
date); Computation
Date receipts
(the Value of any Nonpurpose Investment held at the end of any
Computation
Period); and rebate
receipts
(any recovery of an overpayment of rebate).
|
Investments
of amounts held in a Bona Fide
Debt
Service Fund for the Bonds will be excepted from the rebate requirement but
only
if the gross earnings on such fund for such Bond Year do not exceed
$100,000.
(g) For
each
investment of Gross Proceeds in a Non-Purpose Investment, the Borrower shall
direct the Trustee to record, without limitation, the following information:
purchase date, purchase price, face amount, stated interest rate, any accrued
interest due on its purchase date, disposition date, disposition price and
any
accrued interest due on the disposition date. The Yield to maturity for an
investment presently means that discount rate, based on a compounding frequency
the same as the Bonds (or such other compounding permitted by the Code),
which
when used to determine the present worth, on the purchase date of such
investment or the date on which the investment becomes a Non-Purpose Investment,
whichever is later, of all payments of principal and interest on such investment
gives an amount equal to the fair market value of such investment including
accrued interest due on such date.
(h)
On
each
Computation Date, if such Rebate Amount payable exceeds the amount then on
deposit in the Rebate Fund, the Borrower shall within ten (10) days of the
receipt of the report furnished by the Rebate Expert pursuant to paragraph
(e)
of this Section, pay to the Trustee, the amount necessary to make up such
deficiency and direct the Trustee in writing to pay the same to the United
States within sixty (60) days of the Computation Date. The Borrower shall,
in a
timely fashion, give all written notices and directions to the Trustee as
are
called for under Section 405 of the Indenture for the payment of the Rebate
Amount. Any sums remaining in the Rebate Fund following such payments shall
be
returned to the Borrower. When due, the Authority shall have the right, but
shall not be required, to make such payment to the Trustee on behalf of the
Borrower. Any amount advanced by the Authority pursuant to this paragraph
(h)
shall be added to the moneys owing by the Borrower under this Loan Agreement
and
shall be payable on demand with interest at the rate of twelve percent (12%)
per
annum.
(i) The
rebate amount shall be paid in installments which shall be made at least
once
every fifth Bond Year. The first such installment shall be due to the United
States on behalf of the Authority not later than sixty (60) days after
the end
of the fifth (5th) Rebate Year and shall be in an amount which ensures
that at
least one hundred percent (100%) of the Rebate Amount described above with
respect to the Bonds is paid. Each subsequent payment shall be made not
later
than five (5) years after the date the preceding payment was due. Within
sixty
(60) days after the retirement of the Bonds at maturity or upon earlier
redemption, the Borrower shall direct the Trustee in writing to pay to
the
United States on behalf of the Authority one hundred percent (100%) of
the
aggregate Rebate Amount due with respect to the Bonds not theretofore
paid.
1011002.2
35
(j) Each
payment of the Rebate Amount to be paid to the United States shall be filed
with
the Internal Revenue Service Center, ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, or such other address
that may be specified by the Internal Revenue Service. Each payment shall
be
accompanied by Form 8038-T (or such other form required by the Internal Revenue
Service), as prepared by the Borrower and delivered to the Trustee, and a
statement identifying the Authority, the date of the issue, the CUSIP number
for
the Bond with the longest maturity, which shall be provided to the Trustee
by
the Borrower and a copy of the applicable Form 8038-G, which shall be provided
to the Trustee by the Borrower.
(k) The
Borrower acknowledges that the Authority shall have the right at any time
and in
the sole and absolute discretion of the Authority to obtain from the Borrower
and the Trustee the information necessary to determine the Rebate Amount
required to be paid to the United States pursuant to Section 148(f) of the
Code.
Additionally, the Authority may, with reasonable cause, (i) review or cause
to
be reviewed any determination of the amount to be paid to the United States
made
by or on behalf of the Borrower and (ii) make or retain a Rebate Expert to
make
the determination of the amount to be paid to the United States. The Borrower
hereby agrees to be bound by any such review or determination, absent manifest
error, to pay the costs of such review, including without limitation the
reasonable fees and expenses of counsel or a Rebate Expert retained by the
Authority, and to pay to the Trustee any additional amounts for deposit in
the
Rebate Fund required as the result of any such review or determination.
(l) Except
as
may be permitted pursuant to Section 148(c) of the Code (relating to certain
temporary periods for investment), at no time during the term of the Bonds
shall
the amount invested by the Borrower in Non-Purpose Investments with a Yield
higher than the Yield on the Bonds exceed 10% of the then Outstanding principal
amount of the Bonds. The aggregate amount invested in Non-Purpose Investments
shall be promptly and appropriately reduced as the Outstanding principal
of the
Bonds is reduced.
(m) Notwithstanding
any provision of this Section to the contrary, the Borrower shall be liable,
and
shall indemnify and hold the Authority and the Trustee and their directors,
employers and agents harmless against any liability, for payments due to
the
United States pursuant to Section 148(f) of the Code. Further, the Borrower
specifically agrees that neither the Authority nor the Trustee shall be
held
liable, or in any way responsible, and the Borrower shall indemnify and
hold
harmless the Trustee and the Authority and their directors, employers and
agents
harmless against any liability, for any mistake or error in the filing
of the
payment or the determination of the Rebate Amount due to the United States
or
for any consequences resulting from any such mistake or error. The provisions
of
this paragraph shall survive termination of this Agreement and the resignation
or removal of the Trustee for any reason. In the event of a conflict between
the
provisions of this Section 4.04 and the Code, the provisions of the Code
shall
control.
(n) The
Authority, the Trustee and the Borrower acknowledge that the provisions
of this
Section 4.04 are intended to comply with Section 148(f) of the Code and
the
1011002.2
36
regulations
promulgated thereunder and if as a result of a change in such Section of
the
Code or the promulgated regulations thereunder or in the interpretation thereof,
a change in this Section 4.04 shall be permitted or necessary to assure
continued compliance with Section 148(f) of the Code and the promulgated
regulations thereunder, then with written notice to the Trustee, the Authority
and the Borrower shall be empowered to amend this Section 4.04 and the Authority
may require, by written notice to the Borrower and the Trustee, the Borrower
to
amend this Section 4.04 to the extent necessary or desirable to assure
compliance with the provisions of Section 148 of the Code and the regulations
promulgated thereunder; provided that either the Authority or the Trustee
shall
require, prior to any such amendment becoming effective, at the sole cost
and
expense of the Borrower, an opinion of Bond Counsel satisfactory to the
Authority to the effect that either (i) such amendment is required to maintain
the exclusion from gross income under Section 103 of the Code of interest
paid
and payable on the Bonds or (ii) such amendment shall not adversely affect
the
exclusion from gross income under Section 103 of the Code of the interest
paid
or payable on the Bonds.
(o) (i) The
obligation to pay any Rebate Amount with respect to the Bonds shall be treated
as satisfied if the following requirements are met (the "six month
exception"):
(A) Gross
Proceeds of the Bonds (as modified below) are expended by no later than the
date
which is six (6) months after the Issue Date; and
(B) the
rebate requirement is met for amounts not required to be spent within the
six
(6) month period (excluding earnings on a Bona Fide Debt Service
Fund).
The
requirement described above will be treated as satisfied if no more than
the
lesser of 5% of the Issue Price (as defined in the Code) of the Bonds or
$100,000 are unexpended at the end of the six (6) month period after the
Issue
Date and such amount is expended no later than the date which is one year
after
the Issue Date.
(ii) The
obligation to pay any Rebate Amount with respect to the Bonds shall be
treated
as satisfied if all of the following requirements are satisfied (the "eighteen
month exception"):
(A) Gross
Proceeds of the Bonds (as modified below) are expended in accordance with
the
following schedule:
(1) At
least
15% within six (6) months of the Issue Date,
(2) At
least
60% within twelve (12) months of the Issue Date, and
(3) 100%
within eighteen (18) months of the Issue Date; provided, however, the Bonds
will
not fail to satisfy this requirement as a result of unspent proceeds for
reasonable retainage (as defined below), if the reasonable retainage is
spent
within thirty (30) months of the Issue Date;
1011002.2
37
(B) The
rebate requirement is met with respect to all amounts not required to be
spent
in accordance with the foregoing schedule (other than earnings in a Bona
Fide
Debt Service Fund); and
(C) The
Gross
Proceeds of the Bonds qualify for an initial three (3) year (or five (5)
year)
temporary period.
(iii) For
purposes
of subsections (i) and (ii), Gross Proceeds do not include (A) amounts held
in a
Bona Fide Debt Service Fund, (B) amounts held in a reasonably required reserve
or replacement fund, (C) amounts that, as of the Issue Date, are not reasonably
expected to be Gross Proceeds but that become Gross Proceeds after the end
of
the applicable (i.e., 6 month or 18 month) spending period, (D) sales or
investment proceeds derived from payments under any purpose investment of
the
Issue and (E) amounts representing repayments of grants.
(p) The
Borrower shall give immediate telephonic notice, promptly confirmed in writing,
to the Authority and the Trustee of any Determination of Taxability (as defined
in the Bond) whether the Borrower is on Notice of such Determination of
Taxability by its own filing of any statement, tax schedule, return or document
with the Internal Revenue Service which discloses that a Determination of
Taxability shall have occurred, by its receipt of any oral or written advice
from the Internal Revenue Service that a Determination of Taxability shall
have
occurred, or otherwise.
Section
4.05. Administrative
Expenses.
The
Borrower shall pay to or for the account of the Authority and the Trustee
within
30 days after written notice thereof all reasonable costs and expenses
incurred
by the Authority and the Trustee, Tender Agent, Paying Agent and Registrar
in
connection with the financing and administration of the Project, including,
without limitation, any fees associated with the calculation of rebate,
except
such as may be paid out of the proceeds of the Bonds, including, without
limitation, the costs of administering the Indenture and this Loan Agreement
and
the reasonable fees and expenses of attorneys, consultants and
others.
Section
4.06. Indemnity
Against Claims.
The
Borrower will pay and discharge and will indemnify and hold harmless the
Authority and the Trustee from (a) any lien or charge upon amounts payable
hereunder by the Borrower to the Authority or the Trustee, as the case
may
be,(other than the lien of the Indenture), and (b) any taxes, assessments,
impositions and other charges in respect of the Project Facilities, other
than
Permitted Encumbrances. If any claim of any such lien or charge upon payments,
or any such taxes, assessments, impositions or other charges, are sought
to be
imposed, the Authority or the Trustee, as the case may be, will give prompt
notice to the Borrower, and the Borrower shall have the sole right and
duty to
assume, and shall assume, the defense thereof, with full power to litigate,
compromise or settle the same in its sole discretion.
1011002.2
38
Section
4.07. Indemnification
of the Authority and the Trustee.
The
Borrower agrees, whether or not the transactions contemplated by this Agreement,
the Indenture and the Standby Purchase Agreement shall be
consummated:
(a) to
pay,
and save the Authority and the Trustee harmless against liability for the
payment of all out-of-pocket expenses arising in connection with said
contemplated transactions, including the reasonable fees and expenses of
the
Authority's Counsel and the Trustee's Counsel; and
(b) to
protect, indemnify and save the Authority, any Person who "controls" the
Authority (within the meaning of Section 15 of the Securities Act of 1933,
as
amended) and members, officers, directors, officials, employees and attorneys
of
the Authority, the State, the Trustee and their respective members, officers,
directors, officials, attorneys and employees (collectively, the "Indemnified
Parties") harmless from and against all liabilities, losses, damages, costs,
expenses, (including reasonable attorneys' fees and expenses), taxes, causes
of
action, suits, claims, demands and judgments of any nature or form, (including
all costs, expenses and reasonable counsel fees and expenses incurred in
investigating or defending such claim) by or on behalf of any Person, arising
in
any manner from the transactions of which this Agreement, the Indenture and
the
other Lending Documents is a part or arising in any manner in connection
with
the Project or the financing of the Project including, without limiting the
generality of the foregoing, caused by, relating to, arising out of, resulting
from, or in any way connected with (1) the condition, use, possession, conduct,
management, planning, design, acquisition, construction, installation, financing
or sale of the project or any part thereof, including the obligation to pay
rebate to the Federal government; or (2) any untrue statement of a material
fact
contained in information submitted or to be submitted by the Borrower with
respect to the transactions contemplated hereby (except for information under
the heading “THE AUTHORITY” in the Preliminary Official Statement and in the
Official Statement; or (3) any omission of a material fact necessary to be
stated therein in order to make such statement not misleading or incomplete;
or
(4) any breach or default by the Borrower of or in any of its obligations
hereunder, under the Indenture, the Continuing Disclosure Undertaking from
the
Borrower or any other Lending Document; or (5) the acceptance, administration
or
performance of any of the duties of any said Indemnified Party under the
Indenture, this Agreement the other Lending Documents or any related document,
except with respect to all liabilities, losses, damages, costs, expenses,
taxes,
causes of action, suits, claims, demands and judgments arising out of the
negligence (or in the case of the Authority, the gross negligence) or willful
misconduct of the Indemnified Party seeking indemnification; or (6) any
accident, injury or damage whatsoever to any Person occurring in or about
the
Project. In case any action shall be brought against one or more of the
Indemnified Parties based upon any of the above and in respect to which
indemnity may be sought against the Borrower, such Indemnified Parties shall
promptly notify the Borrower in writing, and the Borrower shall assume the
defense thereof, including the employment of counsel satisfactory to the
Indemnified Parties, the payment of all costs and expenses and the right
to
negotiate and consent to settlement, including the payment of money. Any
one or
more of the Indemnified Parties shall have the right to employ separate counsel
at the Borrower's expense in any such action and to participate in the defense
thereof if, in the opinion of the Indemnified Party, a conflict of interest
could arise out of the representation of the separate parties by one counsel.
The Borrower shall not be liable for any settlement of any such action effected
without Borrower's consent, but if settled with the consent of the Borrower,
or if there is a final judgment for the claimant on any such action, the
Borrower agrees to indemnify and hold harmless the Indemnified Parties from
and
against any loss or liability by reason of such settlement or
judgment.
1011002.2
39
The
Borrower agrees to and does hereby indemnify and hold harmless the Indemnified
Parties against any and all losses, claims, damages or liabilities (including
all costs, expenses, and reasonable counsel fees and expenses incurred in
investigating or defending such claim) suffered by any of the Indemnified
Parties and caused by relating to, arising out of, resulting from, or in
any way
connected to an examination, investigation or audit of the Bonds by the Internal
Revenue Service (IRS). In the event of such examination, investigation or
audit,
the Indemnified Parties shall have the right to employ counsel at the Borrower’s
expense. In such event, the Borrower shall assume the primary role in responding
to and negotiating with the IRS, but shall inform the Indemnified Parties
of the
status of the investigation. In the event Borrower fails to respond adequately
and promptly to the IRS, the Authority shall have the right to assume the
primary role in responding to and negotiating with the IRS and, upon prior
written notice to the Borrower, shall have the right to enter into a closing
agreement, for which the Borrower shall be liable.
(c) Notwithstanding
anything in this Agreement to the contrary which may limit recourse to the
Borrower or may otherwise purport to limit the Borrower's liability, the
provisions of this Section shall control the Borrower's obligations and shall
survive the termination of this Agreement and the Indenture, the repayment
of
the Bonds and the resignation or removal of the Trustee for any
reason.
The
provisions of this Section 4.07 shall not apply to any liabilities, losses,
damages, costs, expenses, taxes, causes of action, suits, claims, demands
or
judgments resulting from the Authority's or the Trustee's own gross negligence,
willful misconduct or fraudulent actions.
Notwithstanding
the fact that it is the intention of the parties that the Authority shall
not
incur pecuniary liability by reason of the terms of this Loan Agreement,
or the
undertakings required of the Authority hereunder, by reason of the issuance
of
the Bonds, by reason of the execution of the Indenture, by reason of the
performance of any act requested of it by the Borrower, or by reason of
the
operation of the Project by the Borrower, including all claims, liabilities
or
losses arising in connection with the violation of any statutes or regulations
pertaining to the foregoing, nevertheless, if the Authority should incur
any
such pecuniary liability (except liability resulting from the Authority's
gross
negligence, willful misconduct or fraudulent actions) then in such event
the
Borrower shall indemnify and hold harmless the Authority against all claims
by
or on behalf of any Person arising out of the same, and all costs and expenses
incurred in connection with any such claim or in connection with any action
or
proceeding brought thereon, and upon notice from the Authority, the Borrower
shall defend the Authority in any such action or
proceeding.
1011002.2
40
Section
4.08. Additional
Information.
Until
payment of the Bonds in full shall have occurred the Borrower shall promptly,
from time to time, deliver to the Trustee and upon the request of the Authority,
to the Authority, such information regarding the operations, business affairs
and financial condition of the Borrower as the Trustee (or the Authority)
may
reasonably request. The Trustee is hereby authorized to deliver a copy of
any
such financial information delivered hereunder, or otherwise obtained by
the
Trustee, to any Bondholder or prospective Bondholder, to any regulatory
authority having jurisdiction over the Trustee and to any other Person as
may be
required by law. The Authority and the Trustee are authorized to provide
information concerning the Outstanding principal amount and payment history
of,
and other information pertaining to, the Bonds or the Medium Term Notes to
any
agency or regulatory authority of the State requesting such
information.
Section
4.09. Maintain
Existence.
Except
as permitted under Section 4.15, the Borrower covenants that it will maintain
its existence and the location of the Project Facilities within the State
of New
Jersey, will preserve and maintain its existence as a corporation under the
laws
of the State, and preserve and maintain its authority to operate and will
operate the Project Facilities as an authorized project within the meaning
of
the Act and as local facilities for the furnishing of gas. The
Borrower will at all times preserve and protect the Project Facilities in
good
repair, working order and safe condition, and from time to time will make,
or
will cause to be made, all needed and proper repairs, renewals, replacements,
betterments and improvements thereto including those required after a casualty
loss. The Borrower may at its own expenses cause the Project Facilities to
be
remodeled or cause such substitutions, modifications and improvements to
be made
to the Project Facilities from time to time as the Borrower, in its discretion,
may deem to be
desirable for its uses and purposes, which remodeling, substitutions,
modifications and improvements shall be included under the terms of this
Loan
Agreement as part of the Project Facilities. The Borrower shall pay all
operating costs, utility charges and other costs and expenses arising Facilities
out of ownership, possession, use or operation of the Project. The Authority
shall have no obligation and makes no warranties respecting the condition
or
operation of the Project.
The
Borrower will not use the financing under this Agreement or the issuance
of the
Bonds by the Authority as a basis for contesting any assessment or levy
of any
tax and, if any administrative body or court of competent jurisdiction
shall
hold for any reason that the Project Facilities are exempt from taxation
by
reason of the financing under this Agreement or the issuance of the Bonds
by the
Authority or other Authority action in respect thereto, the Borrower covenants
to make payments in lieu of all such taxes in an amount equal to such taxes,
and, if applicable, interest and penalties.
Section
4.10. Use
of Project. The
Borrower shall use or cause the Project to be used as an authorized project
for
a purpose and use as provided for under the Act and for the use set forth
in the
Application to the Authority until payment of the Bonds. The Project is
of a
character included within the definition of "project" in the Act, and its
estimated cost is at least $25,000,000. The Borrower will operate the Project
substantially in the form represented in the Application and will neither
(a)
materially alter the operation of the Project without the prior written
consent
of the Authority, nor (b) cause a change in the use of the Project such
that the
Bonds would cease to be for qualified facilities for the local furnishing
of gas
within the meaning of Section 142 of the Code.
1011002.2
41
Section
4.11. Change
in Location.
The
Borrower shall not relocate the Project or any part thereof out of the State.
The Borrower shall not relocate the project within the State without the
prior
written consent of an authorized Authority Representative and an opinion
of Bond
Counsel that the relocation will not affect the tax-exempt status of interest
on
the Bonds (except that the interest on the Bonds is subject to AMT).
Section
4.12. Additional
Reporting Requirements.
(i) On
each anniversary hereof, the Borrower shall furnish to the Authority the
following:
(a) a
certification indicating whether or not the Borrower is aware of any condition,
event or act which constitutes an Event of Default, or which would constitute
an
Event of Default with the giving of notice or passage of time, or both, under
any of the Lending Documents;
(b) a
written
description of the present use of the Project and a description of any
anticipated material change in the use of the Project or in the number of
employees employed at the Project, and
(c) a
report
from every entity that leases or occupies space at the Project location
indicating the number of persons the entity employs at the Project
location.
(ii) Upon
the
request of the Authority, the Borrower shall furnish to the Authority such
financial information as the Authority may reasonably request.
Section
4.13. Observe
Laws. The
Borrower shall observe in all material respects all applicable laws, regulations
and other valid requirements of any regulatory authority with respect to
its
operations at the Project Facilities and the Project Site.
Section
4.14. Number
of Employees.
The
Borrower shall maintain or increase the number of employees employed by the
Borrower as set forth in the Application to the Authority.
Section
4.15. Authority
Consent to Sale of Assets.
The
Borrower shall maintain its existence as a legal entity and shall not sell,
assign, transfer or otherwise dispose of the Project or substantially all
of its
assets without the consent of the Authority; provided however that the Borrower
may merge with or into or consolidate with another entity, and the Project
or
this Agreement may be transferred pursuant to such merger or consolidation
without the prior written consent of the Authority, provided the Borrower
furnishes or demonstrates, as the case may be, the following to the satisfaction
of the Authority: (1) the Borrower causes the proposed surviving, resulting
or
transferee company to furnish the Authority with a Change of Ownership
Information Form then in use by the Authority; (2) the net worth of the
surviving, resulting or transferee company following the merger, consolidation
or transfer is equal to or greater than the net worth of the Borrower
immediately preceding the merger, consolidation or transfer as verified by
the
independent auditors of the Borrower; (3) any litigation or investigations
in
which the surviving, resulting or transferee company or its principals, officers
and directors are involved at the time of such merger, and any court,
administrative or other orders to which the surviving resulting or transferee
company or its officers and directors are subject, relate to matters arising
in
the ordinary
1011002.2
42
course of business; (4) the surviving, resulting or transferee company assumes in writing the obligations of the Borrower under this Loan Agreement and the other Lending Documents; (5) after the merger, consolidation or transfer, the Project shall continue to be operated as an authorized project under the Act; and (6) the merger, consolidation or transfer shall not impair the excludability of interest paid on the Bonds from gross income of the Owners thereof for federal income tax purposes (except that the interest on the Bonds is subject to AMT) or cause a reissuance pursuant to an Opinion of Bond Counsel. The Borrower shall, prior to the taking of any of the foregoing proposed actions, deliver to the Authority and the Trustee an opinion of Tax Counsel to the effect that the proposed action will not cause the interest on the Bonds to become includable in the gross income of the Registered Owners or the beneficial owners of the Bonds for Federal income tax purposes (except that the interest on the Bonds is subject to AMT), except in the event such Holder is a Substantial User or a Related Person thereto.
Section
4.16. Approval
of Tenants by the Authority.
Prior
to leasing, subleasing or consenting to the subleasing or assigning of any
lease
of all or any part of the Project, the Borrower shall cause to be furnished
to
the Authority, a Project Occupant Information Form then in use by the Authority
at such time, completed and executed by the proposed tenant and a copy of
the
proposed lease. In any event, the Borrower shall not permit any such leasing,
subleasing or assigning of leases that would impair the excludability of
interest paid on any tax-exempt Bonds from the gross income of the holders
thereof for purposes of federal income taxation (except that the interest
on the
Bonds is subject to AMT), or that would impair ability of the Borrower to
operate the Project or cause the Project not to be operated as an authorized
project under the Act.
Section
4.17. Continuing
Disclosure.
The
Bonds are currently subject to the continuing disclosure requirements of
Section
(b)(5) of Rule 15c2-12 (the "Rule") adopted by the Securities and Exchange
Commission under the Securities Exchange Act of 1934, as amended and
supplemented. To that end, the Borrower is entering into a continuing disclosure
undertaking with respect to the Bonds. The Borrower hereby covenants and
agrees
with the Bondholders that it will comply with and carry out all of the
provisions of such continuing disclosure undertaking, as amended from time
to
time, applicable to it. Notwithstanding any other provision of this Loan
Agreement, failure of the Borrower to comply with such continuing disclosure
undertaking shall not be considered a default or an event of default under
this
Loan Agreement and the rights and remedies provided by this Loan Agreement
upon
the occurrence of an Event of Default shall not apply to any such failure,
but
the continuing disclosure agreement may be enforced only as provided
therein.
Section
4.18. Brokerage
Fee. The
Authority shall not be liable to the Borrower for any brokerage fee, finders
fee, or loan servicing fee and the Borrower shall hold the Authority harmless
from any such fees or claims.
Section
4.19. Assignment
of Loan Agreement.
Subject
to the provisions of Section 4.15 hereof, the Borrower may not assign or
transfer the whole or any part of this Loan Agreement without the prior written
consent of the Insurer, the Bank under the Standby Purchase Agreement, the
Authority and the Trustee. Any assignment of this Loan Agreement by the Borrower
without the prior express written consent of the Insurer, the Bank under
the
Standby Purchase Agreement, the Authority and the Trustee shall be null and
void.
1011002.2
43
Section
4.20. Compliance
with the Affirmative Action and Prevailing Wage Requirements.
The
Borrower shall comply with the Authority's Affirmative Action and Prevailing
Wage Rate Regulations and to that end:
|
(A)
|
Insert
in all construction bid specifications for any Construction Contract
the
following provisions:
|
Construction of this project is subject to the Affirmative Action Regulations
of
the New Jersey Economic Development Authority which establishes hiring goals
for
minority and female workers. Any Contractor or Subcontractor must agree to
make
every effort to meet the established goals and to submit certified reports
and
records required by the Authority. Copies of the Affirmation Action Regulations
may be obtained by writing to: Office of Affirmative Action, New Jersey Economic
Development Authority, ▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇;
Submission
of a bid signifies that the bidder knows the requirements of the Affirmative
Action Regulations and signifies the bidder's intention to comply. Construction
of this project is subject to N.J.A.C. 19:30-3.1 et
seq.
Workers
employed in construction of this project must be paid at a rate not less
than
the prevailing wage rate established by the New Jersey Commissioner of
Labor;
|
(B)
|
Include
in all Construction Contracts those provisions which are set forth
in the
Addendum to Construction Contract annexed hereto as Exhibit
D;
|
|
(C)
|
Obtain
from all Contractors and submit to the Authority a Contractor's
certificate in the form annexed hereto as Exhibit
E
within 3 Business Days of the execution of any Construction
Contract;
|
|
(D)
|
Create
an office of Borrower Affirmative Action Officer and maintain in
that
office until the completion date an individual having responsibility
to
coordinate compliance by the Borrower with the Authority’s Affirmative
Action Regulations and to act as liaison with the Authority’s Office of
Affirmative Action;
|
|
(E)
|
Submit
to the Authority on the completion date, a completion certificate
in the
form annexed hereto as Exhibit
F;
and
|
|
(F)
|
Furnish
to the Authority all other reports and certificates required under
the
Authority’s Affirmative Action and Prevailing Wage Rate
Regulations.
|
1011002.2
44
ARTICLE
V
EVENTS
OF DEFAULT AND REMEDIES
Section
5.01. Events
of Default.
Any one
or more of the following shall constitute an "Event of Default" or "event
of
default" hereunder:
(a) Failure
by the Borrower to provide the Authority with moneys sufficient to pay when
due
any payment of the principal or Redemption Price on the Bonds;
(b) Failure
by the Borrower to provide the Authority with moneys sufficient to pay when
due
any payment of the interest on the Bonds;
(c)
Failure
by the Borrower to pay when due any payment required to be made under this
Loan
Agreement other than payments for the payment of the principal or Redemption
Price or purchase price of or interest on the Bonds, which failure shall
continue for a period of thirty (30) days after written notice in accordance
with Section 7.01 hereof, specifying such failure and requesting that it
be
remedied, is given to the Borrower by the Authority or the Trustee;
(d) Failure
by the Borrower to observe and perform any covenant, condition or agreement
hereunder on its part to be performed hereunder (except the payment obligations
referred to above) and continuance of such failure for a period of ninety
(90)
days, after receipt by the Borrower of written notice in accordance with
Section
7.01 hereof, from the Authority or the Trustee specifying the nature of such
failure and requesting that it be remedied;
(e)
(i) The
Borrower shall have applied for or consented to the appointment of a custodian,
receiver, trustee (other than the Mortgage Trustee) or liquidator of all
or a
substantial part of its assets; (ii) the Borrower is generally not paying
its
debts as they become due, has made a general assignment for the benefit of
creditors, or has filed a voluntary petition in bankruptcy, or a petition
or an
answer seeking reorganization or an arrangement with creditors or to take
advantage of any insolvency law; (iii) the Borrower has filed an answer
admitting the material allegations of a petition in any bankruptcy or insolvency
proceeding; (iv) a petition in bankruptcy shall have been filed against the
Borrower and shall not have been dismissed for a period of sixty (60)
consecutive days; (v) an order for relief has been entered under the Bankruptcy
Code; or (vi) an order, judgment or decree shall have been entered, without
the
application, approval or consent of the Borrower, by any court of competent
jurisdiction appointing a receiver, trustee (other than the Mortgage Trustee),
custodian or liquidator of the Borrower, or a substantial part of its assets,
and such order, judgment or decree shall have continued unstayed and in effect
for any period of sixty (60) consecutive days;
(f) If
any
representation or warranty made by or on behalf of the Borrower (or its
officers
or representatives) in the Application, the Bond Purchase Agreement, this
Loan
Agreement or any other document furnished in connection with this Loan
Agreement
was false in any material respect when made;
1011002.2
45
(g) The
dissolution or liquidation of the Borrower (except as permitted pursuant
to
Section 4.15 hereof);
(h) An
Event
of Default (as defined in the Note Indenture) shall have occurred under the
Note
Indenture;
(i)
Failure
by the Borrower to provide the Tender Agent with monies sufficient to pay
when
due any payment of the Purchase Price of the Bonds upon the optional or
mandatory tender thereof (provided that the Borrower has no obligation to
fund a
mandatory tender during an Auction Rate Period); or
(j) Receipt
by the Trustee of written notice from the Insurer of the occurrence of an
event
of default under the Insurance Agreement.
Section
5.02. Remedies
on Default.
(a)
Whenever any Event of Default referred to in Section 5.01 hereof shall have
occurred and be continuing and the Event of Default shall not theretofore
been
cured, the Authority or the Trustee subject to (e) below, may take any one
or
more of the following remedial steps, provided, that no remedial steps shall
be
taken by the Authority the effect of which would be to entitle the Authority
to
funds necessary for the payment of principal and interest on Bonds which
have
not yet matured unless such principal and interest shall have been declared
due
and payable in accordance with the Indenture and such declaration shall not
have
been rescinded. The Authority or the Trustee may take whatever action at
law or
in equity as may appear necessary or desirable to collect the amounts then
due
and thereafter to become due, or to specifically enforce (without posting
bond
or other security) the performance or observance of any obligations, agreements,
or covenants of the Borrower under this Loan Agreement, the Note Indenture
or
the Medium Term Notes.
(b)
If the
Borrower fails to make any payment required hereunder, the payment so in
default
shall continue as an obligation of the Borrower until the amount in default
shall have been fully paid.
(c)
In case
the Authority shall have proceeded to enforce the rights of the Authority
under
this Loan Agreement and such proceedings shall have been discontinued or
abandoned for any reason or shall have been determined adversely to the
Authority, then and in every such case, subject to the binding effect of
the
decision of any court of competent jurisdiction, the Borrower and the Authority
shall be restored respectively to their several positions and rights hereunder
and all rights, remedies and powers of the Borrower and the Authority shall
continue as though no such proceedings had been taken.
(d) Nothing
contained in this Section shall be deemed to prevent the Borrower from
seeking
legal or equitable relief if it disputes the existence of an event of
default.
(e) Except
as
provided in Section 5.02(f), notwithstanding anything in this Loan Agreement
to
the contrary (unless an Insurer Default has occurred and is continuing),
the
Insurer will direct the taking by the Authority and the Trustee of all
remedial
actions or steps hereunder.
1011002.2
46
(f) Notwithstanding
anything herein or in any other document executed in conjunction with the
Bonds
to the contrary, nothing herein shall affect the Authority's unconditional
right
to specifically enforce its Reserved Rights or to enforce the Authority’s rights
set forth in Section 2.11 hereof with respect to mandatory prepayment of
the
Loan.
Section
5.03. No
Duty to Mitigate Damages.
Neither
the Authority nor the Trustee shall be required to do any act whatsoever
or
exercise any diligence whatsoever to mitigate the damages to the Borrower
if any
event of default shall occur hereunder.
Section
5.04. Remedies
Cumulative.
No
remedy herein conferred upon or reserved to the Authority is intended to
be
exclusive of any other available remedy or remedies but each and every such
remedy shall be cumulative and shall be in addition to every other remedy
given
under this Loan Agreement or now or hereafter existing at law, in equity
or by
statute. Delay or omission to exercise any right or power accruing upon any
default or failure by the Authority to insist upon the strict performance
of any
of the covenants and agreements herein set forth or to exercise any rights
or
remedies upon default by the Borrower hereunder shall not impair any such
right
or power or be considered or taken as a waiver or relinquishment for the
future
of the right to insist upon and to enforce, from time to time and as often
as
may be deemed expedient, by injunction or other appropriate legal or equitable
remedy, strict compliance by the Borrower with all of the covenants and
conditions hereof, or of the right to exercise any such rights or remedies,
if
such default by the Borrower be continued or repeated.
Section
5.05. Exercise
of Remedies.
In order
to entitle the Authority to exercise any remedy available to it, it shall
not be
necessary to give notice, other than such notice as may be required in this
Article or elsewhere in this Loan Agreement. Such rights and remedies as
are
given the Authority hereunder shall extend to the Trustee and, subject to
the
provisions of the Indenture, shall also extend to the Bondholders. The Trustee
and the Bondholders, subject to the provisions of the Indenture, shall be
entitled to the benefit of all covenants and agreements herein
contained.
Section
5.06. Agreement
to Pay Reasonable Attorneys Fees and Expenses.
In the
event the Borrower should default under any of the provisions of this Loan
Agreement and either the Authority or the Trustee shall require and employ
attorneys or incur other expenses for the collection of payments due or
to
become due or the enforcement or performance or observance of any obligation
or
agreement on the part of the Borrower herein contained or under any Lending
Document or the enforcement of the Bonds, the Borrower shall on demand
therefor
pay to the Authority and the Trustee, as the case may be, the reasonable
fees
and expenses of such attorneys and such other reasonable expenses so incurred
by
the Authority or the Trustee.
The
Borrower shall pay or reimburse the Insurer for any and all charges, fees,
costs, and expenses that the Insurer may reasonably pay or incur in connection
with the following: (i) the administration, enforcement, defense, or
preservation of any rights or security hereunder or under any other transaction
document; (ii) the pursuit of any remedies hereunder, under any other
transaction document, or otherwise afforded by law or equity, (iii) any
amendment, waiver, or other action with respect to or related to this Loan
Agreement
1011002.2
47
or
any
other transaction document whether or not executed or completed; (iv) the
violation by the Borrower of any law, rule, or regulation or any judgment,
order
or decree applicable to it; (v) any advances or payments made by the Insurer
to
cure defaults of the Borrower under the transaction documents; or (vi) any
litigation or other dispute in connection with this Loan Agreement, any other
transaction document, or the transactions contemplated hereby or thereby,
other
than amounts resulting from the failure of the Insurer to honor its payment
obligations under the Policy. The Insurer reserves the right to charge a
reasonable fee as a condition to executing any amendment, waiver, or consent
proposed in respect of this Loan Agreement or any other transaction document.
The obligations of the Borrower to the Insurer shall survive discharge and
termination of this Loan Agreement.
Section
5.07. No
Additional Waiver Implied by One Waiver.
In the
event any agreement contained in this Loan Agreement should be breached by
either party and thereafter waived by the other party, such waiver shall
be
limited to the particular breach so waived and shall not be deemed to waive
any
other breach hereunder. In view of the assignment of the Authority’s rights in
and under this Loan Agreement to the Trustee (except to the extent set forth
herein and in the Indenture), the Authority shall have no power to waive
any
default hereunder by the Borrower without the consent of the Trustee.
Notwithstanding the foregoing, if, after the maturity of the Outstanding
Bonds
shall have been accelerated by the Trustee upon the occurrence of any Event
of
Default under the Indenture, all arrears of interest on the Outstanding Bonds
and interest on overdue installments of interest (to the extent permitted
by
law) at a rate per annum which is equal to the rate per annum borne by the
Bonds
and the principal and premium (if any) on all Bonds then Outstanding which
have
become due and payable otherwise than by acceleration, and all other sums
payable under the Indenture, except the principal of and the interest on
such
Bonds which by such acceleration shall have become due and payable, shall
have
been paid, all other things shall have been performed in respect of which
there
was an Event of Default, there shall have been paid the reasonable fees and
expenses of the Trustee, including
reasonable attorneys fees and expenses paid or incurred, and such Event of
Default shall be waived by the Trustee with the consequence under the Indenture
that such acceleration is rescinded, then the Borrower's default hereunder
shall
be deemed waived without further action by the Trustee or the Authority,
provided that the Trustee receives the written consent of the Insurer to
such
waiver.
Section
5.08. Specific
Performance.
In
addition to the above remedies, if the Borrower commits a breach, or threatens
to commit a breach, of this Loan Agreement, the Authority shall have the
right
and remedy, without posting bond or other security, to have the provisions
of
this Loan Agreement specifically enforced by any court having equity
jurisdiction, it being acknowledged and agreed that any such breach or
threatened breach will cause irreparable injury to the Authority and that
money
damages will not provide an adequate remedy therefor.
1011002.2
48
ARTICLE
VI
CONDITIONS
OF LENDING
The
Authority's obligation to lend hereunder is subject to the following conditions
precedent:
Section
6.01. Opinion
of Counsel for the Borrower.
On or
prior to the date of the borrowing hereunder, the Authority shall have received
the opinion of Counsel for the Borrower, dated the date of such borrowing,
addressed to the Authority and the Trustee, and satisfactory in form and
substance to Bond Counsel in the form required by the Bond Purchase Agreement
and stating that (a) each of the Lending Documents to be executed by the
Borrower has been duly executed and delivered by the Borrower, in accordance
with the provisions hereof, and each such Lending Document constitutes a
legal,
valid and binding obligation of the Borrower, enforceable in accordance with
its
terms, (b) the Medium Term Notes will initially be secured by the Pledged
Bonds
(as set forth in Exhibit A) issued to the Note Trustee in an aggregate principal
amount at least equal to the principal amount of the Medium Term Notes and
the
Pledged Bonds, as a separate series of the Borrower’s first mortgage bonds, are
secured by a lien on the Borrower’s property on a parity with other first
mortgage bonds under the Mortgage Indenture, and (c) this Loan Agreement
and the
Note Indenture will create the liens they purport to create, subject to no
prior
liens, other than Permitted Encumbrance.
Section
6.02. Opinion
of Bond Counsel.
The
Authority shall have received the opinion of Bond Counsel that interest income
on the Bonds is exempt from inclusion in federal gross income for purposes
of
Federal income taxes under the Code; that the offering of the Bonds is not
required to be registered under the Securities Act of 1933, as amended, or
under
the rules and regulations promulgated thereunder; and that the Bonds have
been
duly authorized and issued under the provisions of the Act.
Section
6.03. Loan
and Other Documents.
The
Authority shall have received or caused the Trustee to receive:
(a) This
Loan
Agreement duly executed by the parties thereto;
(b) The
Indenture duly executed by the parties thereto;
(c) Certificates,
in form and substance acceptable to the Authority, evidencing the insurance
required to be maintained by Section 3.08 hereof;
(d) The
certification and opinion required by Section 209(d) of the
Indenture;
(e) Initial
Medium Term Notes in the aggregate principal amount of $25,000,000;
1011002.2
49
|
(f)
|
A
certified copy of the Pledged Bonds;
and
|
|
(g)
|
All
other documents reasonably required by the Authority and the
Trustee.
|
Section
6.04. Legal
Matters.
Legal
matters in connection with the making of the Loan shall be satisfactory to
Bond
Counsel.
Section
6.05. Bond
Issuance Fee.
The
Authority shall have received from the Borrower the Bond issuance fee of
$112,500.00.
1011002.2
50
ARTICLE
VII
MISCELLANEOUS
Section
7.01. Notices.
(a) All
notices, certificates or other communications hereunder shall be sufficiently
given and shall be deemed given on the earlier of delivery (which may be
facsimile transmission), or on the third Business Day after being mailed
by
registered or certified mail, postage prepaid, addressed as
follows:
|
If
to the Authority at:
|
▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
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▇▇
▇▇▇ ▇▇▇
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▇▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
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|
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Attention:
Chief Executive Officer
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|
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If
to the Borrower at:
|
▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
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▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
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Attn:
▇▇▇▇▇ ▇▇▇▇▇
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|
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If
to the Trustee at:
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The
Bank of New York
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▇▇▇
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
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▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
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Attention:
Corporate Trust Administration
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If
to the Insurer, at
|
Financial
Guaranty Insurance Company
|
|
▇▇▇
▇▇▇▇ ▇▇▇▇▇▇
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▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
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Attention:
Risk Management
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If
to the Fiscal Agent, at:
|
U.S.
Bank Trust National Association
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▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇
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▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
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Attention:
Corporate Trust Department.
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If
to the Auction Agent, at:
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The
Bank of New York
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▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇
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▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
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Telephone
No.: ▇▇▇-▇▇▇-▇▇▇▇
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Facsimile
No.: ▇▇▇-▇▇▇-▇▇▇▇
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If
to the
Market Agent or the Remarketing Agent at such address as shall be designated
by
such party; and if to the Agent Bank or an Agent obligor on an Alternate
Liquidity Facility, at such address as shall be designated by it in writing
to
the Authority, the Borrower, the Trustee, the Remarketing Agent and the Insurer.
A copy of each notice, certificate, request or other communication given
hereunder to the Authority, the Borrower, the Trustee, the Remarketing Agent,
the Insurer or the Agent Bank shall also be given to the others. Any of the
foregoing parties may, by notice given hereunder, designate any further or
different addresses to which subsequent notices, certificates, requests or
other
communications shall be sent.
1011002.2
51
If
to the
Bondholders at the addresses appearing on the registry books maintained by
the
Authority under the Indenture.
(b) A
duplicate copy of each notice, certificate or other communication given
hereunder by either the Authority or the Borrower to the other shall also
be
given to the Trustee. The Authority, the Borrower and the Trustee may, by
notice
given hereunder, designate any further or different addresses to which
subsequent notices, certificates or other communications shall be
sent.
Section
7.02. Amendments.
This
Loan Agreement may be amended only by written instrument executed by the
parties
hereto and with the concurring written consent of the Trustee, the Insurer
and
the Bank under the Standby Purchase Agreement given in accordance with the
provisions of the Indenture.
Section
7.03. Expenses
and Fees.
All
expenses in connection with the preparation, execution, delivery, recording
and
filing of this Loan Agreement, and the other Lending Documents and in connection
with the preparation, issuance and delivery of the Bonds, the Authority's
fees,
the fees and expenses of St. ▇▇▇▇ & ▇▇▇▇▇, L.L.C., the fees and expenses of
the Trustee and the fees and expenses of Trustee's counsel shall be paid
directly by the Borrower. The Borrower shall also pay throughout the term
of the
Bonds the Authority's fees and expenses and the Trustee's annual and special
fees and expenses under the Indenture, the Loan Agreement and the other Lending
Documents, including, but not limited to, reasonable attorney's fees and
all
costs of issuing, collecting payment on and redeeming the Bonds thereunder,
and
any costs and expenses of any Bondholder (or Beneficial Owner) in connection
with any approval, consent or waiver under, or modification of, any such
document.
Section
7.04 Concerning
Successors and Assigns.
All
covenants, agreements, representations and warranties made herein, in the
other
Lending Documents and in the certificates delivered pursuant hereto and thereto
shall survive the making of the Loan and the execution and delivery of the
Medium Term Notes and shall continue in full force and effect so long as
the
Loan is Outstanding and unpaid. Whenever in this Loan Agreement any of the
parties hereto is referred to, such reference shall be deemed to include
the
successors and assigns of such party; and all covenants, promises and agreements
made by or on behalf of the Borrower which are contained in this Loan Agreement
shall bind its successors and assigns and inure to the benefit of the successors
and assigns of the Authority and the Trustee.
Section
7.05. Benefit
of and Enforcement by Bondholders.
The
Authority and the Borrower agree that this Loan Agreement is executed in
part to
induce the purchase by others of the Bonds and for the further securing
of the
Bonds, and accordingly all covenants and agreements on the part of the
Authority
and the Borrower as to the amounts payable with respect to the Bonds hereunder
are hereby declared to be for the benefit of the Holders from time to time
of
the Bonds and any Bank and may be enforced as provided in the Indenture
on
behalf of the Bondholders by the Trustee or by the Holders from time to
time of
the Bonds as provided in the Indenture.
1011002.2
52
Section
7.06. Prior
Agreements Superseded.
This
Loan Agreement, together with all agreements executed by the parties
concurrently herewith or in conjunction with the sale of the Bonds, shall,
to
the extent inconsistent therewith, completely and fully supersede all other
prior understandings or agreements, both written and oral, between the Authority
and the Borrower relating to the Loan and the Project.
Section
7.07. Execution
of Counterparts.
This
Loan Agreement may be executed in several counterparts each of which shall
be an
original and all of which shall constitute but one and the same
instrument.
Section
7.08. Date
of Loan Agreement for Identification Purposes Only; Effective
Date.
The
date of this Loan Agreement shall be for identification purposes only and
shall
not be construed to imply that this Loan Agreement was executed on such date.
This Loan Agreement shall become effective upon its delivery.
Section
7.09. Laws
Governing Loan Agreement.
This
Loan Agreement shall be governed by and construed in accordance with the
applicable laws of the State.
Section
7.10. Parties
Interested Herein.
(a)
Nothing in this Loan Agreement expressed or implied is intended or shall
be
construed to confer upon, or to give to, any Person, other than the Authority,
the Trustee, the Borrower, the Tender Agent, the Paying Agent, any Bank,
the
Insurer and the Holders of the Bonds, any right, remedy or claim under or
by
reason of this Loan Agreement or any covenant, condition or stipulation thereof.
All the covenants, stipulations, promises and agreements herein contained
by and
on behalf of the Authority or the Borrower shall be for the sole and exclusive
benefit of the Authority, the Trustee, the Borrower, the Tender Agent, the
Paying Agent, the Insurer and the Holders of the Bonds.
(b) Upon
the
Expiration of the term of a Standby Purchase Agreement, references to any
Bank
or the Agent Bank herein shall be of no effect, except with respect to
amounts
payable to any Bank which have not been paid. If such amounts have not
been
paid, the Agent Bank shall be entitled to all notices hereunder. If an
"Event of
Default" shall have occurred under the Indenture due solely to failure
by any
Bank to honor its obligations pursuant to a Standby Purchase Agreement,
so long
as such failure continues any reference herein to "Bank" or the "Agent
Bank"
shall be suspended until such failure no longer continues and of no effect
to
the extent that the reference may be construed to include any such Bank.
Upon
the Expiration of the term of an Alternate Liquidity Facility, references
to an
Obligor on such Alternate Liquidity Facility or the Agent Obligor on such
Alternate Liquidity Facility shall be of no effect, except with respect
to
amounts payable to any Obligor on such Alternate Liquidity Facility which
have
not been paid. If such amounts have not been paid, the Agent Obligor on
such
Alternate Liquidity facility shall be entitled to all notices hereunder.
If an
"Event of Default" shall have occurred under the Indenture due solely to
failure
by any Obligor on an Alternate Liquidity Facility to honor its obligations
under
such Alternate Liquidity Facility, so long as such failure continues any
reference herein to "Obligor on an Alternate Liquidity Facility" or the
"Agent
Obligor on an Alternate Liquidity Facility" shall be suspended until such
failure no longer continues and of no effect to the extent that the reference
may be construed to include any such Obligor.
1011002.2
53
Section
7.11. Assignment
of Lending Documents.
The
Borrower acknowledges that the Lending Documents including the Medium Term
Notes, shall be assigned by the Authority to the Trustee as security for
the
Bonds pursuant to the terms of the Indenture. The Authority retains the right,
jointly and severally with the Trustee, to specifically enforce its Reserved
Rights.
The
Borrower assents to such assignment and hereby agrees that, as to the Trustee,
its obligation to make payments under the Lending Documents and the Medium
Term
Notes shall be absolute, and shall not be subject to any defense or any right
of
set-off, counterclaim or recoupment arising out of any breach by the Authority
of any duty or obligation to the Borrower, whether hereunder or otherwise,
or
out of indebtedness or liability at any time owing to the Borrower by the
Authority.
Section
7.12. Further
Assurances and Corrective Instruments.
The
Authority and the Borrower agree that they will, from time to time, execute,
acknowledge and deliver, or cause to be executed, acknowledged and delivered,
such supplements hereto and such further instruments as may reasonably be
required for correcting any inadequate or incorrect description of the Project
or for carrying out the intention of or facilitating the performance of this
Loan Agreement in the manner provided in Article XII of the
Indenture.
Section
7.13. No
Recourse to Stockholders, Directors, Officers, etc. No
recourse under or upon any obligation, covenant or agreement contained in
this
Loan Agreement, including any amendment hereto, shall be had against any
incorporator, or against any past, present or future stockholder, officer
or
director, as such or the Borrower or of any successor corporation, either
directly or through the Borrower or any successor corporation under a rule
of
law, statute or constitution or by the enforcement of any assessment or by
any
legal or equitable proceeding or otherwise; it being expressly agreed and
understood that this Loan Agreement and any amendments thereto are solely
corporate obligations, and that no personal liability whatever shall attach
to,
or be incurred by, such incorporators, stockholders, officers or directors,
as
such, of the Borrower or of any successor corporation or any of them, because
of
the incurring of the indebtedness represented by this Loan Agreement or under
the Medium Term Notes or by reason of any of the obligations, covenants or
agreements contained in this Loan Agreement, including any amendments
hereto.
1011002.2
54
IN
WITNESS WHEREOF,
the
Authority and the Borrower have caused this Loan Agreement to be executed
in
their names and attested by their duly authorized officers.
ATTEST:
NEW
JERSEY ECONOMIC
DEVELOPMENT
AUTHORITY
/s/
▇▇▇▇▇▇▇
▇▇▇▇
By: /s/ ▇▇▇▇
▇▇▇▇▇▇
▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇
Assistant
Secretary Director
of Lending Services
1011002.2
55
SOUTH JERSEY GAS COMPANY
By: /s/ ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Senior
Vice President & Chief Financial Officer
1011002.2
56
EXHIBIT
A
To
provide a source of payment for the Bonds, South Jersey Gas Company (“SJG”) will
issue a note under an Indenture of Trust dated as of October 1, 1998 (as
supplemented, the “Note Indenture”) between SJG and The Bank of New York, as
Note Trustee to The Bank of New York, as Trustee for the holders of the Bonds.
The Note issued under the Note Indenture will be designated “Medium Term Note,
Series C, 2006-1” (the “Notes”).
A
series
of first mortgage bonds designated as “South Jersey Gas Company First Mortgage
Bonds, 10% Medium Term Notes, Series C” (the “Pledged Bonds”) was issued under
the First Mortgage dated October 1, 1947 (as supplemented and amended, including
by that certain 24th
Supplemental Indenture dated as of September 1, 2005 from SJG to The Bank
of New
York, as Mortgage Trustee, the “Mortgage Indenture”). Until the Substitution
Date, which is described herein below, the Notes will be secured by the Pledged
Bonds issued to the Note Trustee in an aggregate principal amount equal to
the
principal amount of the Notes. The Pledged Bonds will be deemed to bear interest
corresponding to the required payment of interest on the Notes. The Pledged
Bonds constitute a separate series of SJG’s first mortgage bonds, all of which
are secured by a lien on substantially all of the property owned by SJG (the
“First Mortgage Bonds”).
The
Substitution Date will occur upon the retirement of First Mortgage Bonds
of each
of the Seventeenth and the Nineteenth Series, on which date the Pledged Bonds
shall be delivered to the Company for cancellation. As a result, on the
Substitution Date, the Pledged Bonds will cease to secure the Notes, and,
at the
Company’s option, the Notes either will become the Company’s unsecured general
obligations or will be secured by first mortgage bonds (the “Substituted First
Mortgage Bonds”) issued under a new mortgage indenture (the “Substituted
Mortgage”). If a Substituted Mortgage is delivered pursuant to the Note
Indenture, “Mortgage Indenture” shall mean such Substituted Mortgage and
“Pledged Bonds” shall mean Pledged Substituted Mortgage Bonds delivered pursuant
to the Note Indenture.
A-1
1011002.2
EXHIBIT
B
The
Bank
of New York
▇▇▇
▇▇▇▇▇
▇▇▇▇ ▇▇▇▇
▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇
Attention:
Corporate Trust Administration
BORROWER'S
COMPLETION CERTIFICATE
Pursuant
to Section 3.04 of the Loan Agreement by and between the New Jersey Economic
Development Authority and South Jersey Gas Company (the "Borrower") dated
as of
April 1, 2006 (the "Loan Agreement"), the undersigned, an Authorized
Representative of the Borrower (all undefined terms used herein shall have
the
same meaning ascribed to them in the Loan Agreement), as of the date hereof,
certifies that:
|
(i)
|
the
Project Facilities were completed in all material respects as of
_________________________, 20__;
|
|
(ii)
|
the
cost of all labor, services, materials and supplies used in the
Project
have been paid, or will be paid from amounts retained by The Bank
of New
York, the Trustee, at the Borrower's direction for any cost of
the Project
not now due and payable or, if due and payable, not presently paid,
except
for any costs which the Borrower is contesting in good
faith;
|
|
(iii)
|
the
facilities necessary for the completion of the Project have been
installed
to the Borrower's satisfaction; such Project Facilities so installed
are
suitable and sufficient for the operation of the Project for the
intended
purposes and all costs and expenses, if any, incurred in the acquisition
and installation of such Project Facilities have been paid, or
will be
paid from amounts retained by the Trustee at the Borrower's direction
or
from monies supplied by the Borrower for any cost of the Project
not now
due and payable or, if due and payable, not presently paid, except
for any
costs which the Borrower is contesting in good
faith;
|
|
(iv)
|
the
Project is being operated as an authorized "project" under the
Act and
substantially as proposed in the Application of South Jersey Gas
Company;
|
|
(v)
|
in
the event the Project included construction (a) the Borrower has
reviewed
the Contractor's Completion Certificate and the Borrower (without
having
made any independent investigation) has no knowledge or information
that
the representations contained therein are false or misleading and
(b) the
Borrower required in all Construction Contracts that wages paid
to workers
employed in the performance of Construction Contracts be paid at
a rate
not less than the Prevailing Wage
Rate.
|
1011002.2 B-1
I
acknowledge that any amount hereafter remaining in the Construction Fund
(except
amounts therein sufficient to cover costs of the Project not now due and
payable
or not presently paid and except for interest or other income earned from
the
investment of the moneys held in the Construction Fund, if any) shall be
transferred into the Optional Redemption Subaccount in the Bond Fund and
shall
be used to redeem the Bonds on the next succeeding redemption date on which
Bonds can be redeemed without penalty or premium. Amounts transferred to
and
held in the Optional Redemption Subaccount in the Bond Fund shall not be
invested at a yield materially higher than the yield on the Bonds.
This
certificate is given without prejudice to any rights against third parties
which
exist on the date hereof or which may subsequently come into being.
SOUTH
JERSEY GAS
COMPANY
By:____________________________________________
Authorized
Representative of the Borrower
Dated:
_______________, 20__
B-2
1011002.2
EXHIBIT
C
TO: The
Bank
of New York
▇▇▇
▇▇▇▇▇
▇▇▇▇ ▇▇▇▇
▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇
Attention:
▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇▇
REQUISITION
NO. ____
The
undersigned, an Authorized Representative of South Jersey Gas Company, pursuant
to the Loan Agreement by and between South Jersey Gas Company (the "Borrower")
and the New Jersey Economic Development Authority, dated as of April 1, 2006
(the "Loan Agreement") makes the following requisition for payment from the
Construction Fund established pursuant to the Loan Agreement entered into
with
regard to the South Jersey Gas Company Project.
Payment
to:
Amount: $
Reason
for Payment:
Such
amount is based on an obligation properly incurred pursuant to the provisions
of
the Loan Agreement, is a Proper Charge against said Construction Fund, is
unpaid
or unreimbursed from the Construction Fund and has not been the basis of
any
previous withdrawal. The amount requested, to the extent it represents work
performed or supervised by officers or employees of the Borrower, does not
exceed the actual cost to the Borrower of any cost or expense incurred by
reason
of work performed or supervised by officers or employees of the Borrower
or any
of its affiliates. No Event of Default has occurred and is continuing under
any
provision of the Loan Agreement.
I
further
certify that no written notice of any lien, right to lien, attachment upon
or
claim, affecting the right to receive payment of, any of the monies payable
under this requisition has been received, or if any notice of any such lien,
attachment or claim has been received, such lien, attachment or claim has
been
released or discharged or will be released or discharged upon payment of
this
requisition.
IN
WITNESS WHEREOF, I have hereunto set my hand this ____ day of ____________,
200_.
SOUTH
JERSEY GAS
COMPANY
By:______________________________________________
Authorized
Representative of the Borrower
C-1
1011002.2
EXHIBIT
D
ADDENDUM
TO CONSTRUCTION CONTRACT
Every
construction contract must require that:
|
1.
|
Ten
percent of each disbursement for the construction of the project
will be
retained by the project owner/applicant, agent or trustee until
the
Authority's Office of Affirmative Action gives written notice that
the
amount may be released.
|
|
2.
|
The
contractor will not discriminate against any employee or applicant
for
employment because of age, race, creed, color, national origin,
ancestry,
marital status, sex or religion.
|
|
3.
|
The
contractor must make every effort to employ minority workers and
female
workers at a level consistent with applicable hiring
goals.
|
|
4.
|
The
contractor must submit employment reports on a weekly basis and
Project
▇▇▇▇▇▇▇ reports on a monthly basis to the
Authority.
|
|
5.
|
The
contractor must submit such certificates to the Authority as are
required
by the Application for Financial
Assistance.
|
|
6.
|
The
contractor shall comply with any regulations promulgated by the
New Jersey
Department of Labor pursuant to P.L. 1963, c. 150 as amended and
supplemented from time to time requiring the payment of prevailing
wages.
|
|
7.
|
The
contractor shall ascertain from the New Jersey Department of Labor
the
prevailing wage rate in the locality in which the Project is located
for
each craft or trade needed to complete the
Project.
|
D-1
1011002.2
EXHIBIT
E
NEW
JERSEY ECONOMIC DEVELOPMENT AUTHORITY
AFFIRMATIVE
ACTION CERTIFICATE
NJEDA
PROJECT NUMBER
PROJECT
OWNER/APPLICANT NAME
PROJECT
LOCATION (include
Street, City and County)
|
NOTE:
|
Upon
completion, this certificate must be mailed to: Affirmative Action
Officer, New Jersey Economic Development Authority, ▇▇▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇. If there are any questions, contact
the
Affirmative Action Officer at ▇▇▇-▇▇▇-▇▇▇▇.
|
CERTIFICATE
SUBMITTED BY
(Check
One)
o General
Contractor
o Engineer
o Subcontractor
o Architect
o Construction
Manager
o Professional
Planner
I/We,
the
undersigned engaged in the construction of the above named project certify
that:
|
1.
|
The
full name and business address of the undersigned
is:
|
NAME
ADDRESS PO
BOX
|
CITY
|
COUNTY
|
|
STATE
|
ZIP
CODE
|
TELEPHONE
FAX E-MAIL
ADDRESS
|
Area
Code (
)
|
Area
Code
( )
|
AFFIRMATIVE
ACTION CONTACT PERSON w/your company (NOT NJEDA)
E-1
1011002.2
Affirmative
Action Certificate Page
2 of
3
|
2.
|
Has
the aforementioned party been denied a business-related license
or had it
suspended or revoked by any administrative, governmental or regulatory
agency?
|
o Yes o No
|
3.
|
Is
the aforementioned debarred, suspended or disqualified from contracting
with any federal, state or municipal
agency?
|
o Yes o No
|
4.
|
I/We
are fully familiar with the provisions of the Prevailing Wage Regulations
of the New Jersey Economic Development Authority, N.J.A.C. 19:30-4.1,
and
the applicable prevailing wage rates established by the New Jersey
Commissioner of Labor, and the sanctions for failure to pay the
prevailing
wage provided in N.J.S.A. 34:11-56.35 -
34:11-56.40.
|
o Yes o No
|
5.
|
I/We
have received a copy of the Affirmative Action Regulations of the
New
Jersey Economic Development Authority, revised August 8, 1990.
I/We have
agreed as part of the construction contract to comply with the
provisions
of the Affirmative Action Regulations, to meet the minority employment
goals, and to submit to the Authority weekly payroll reports showing
the
name, race, sex, craft or trade, gender, Social Security Number
and all
deductions made from wages earned. I/We will also provide the Monthly
Project ▇▇▇▇▇▇▇ Report within seven (7) days of the end of each
month.
|
o Yes o No
|
6.
|
I/We
have agreed as part of the contract to pay to workers employed
in the
construction of the project wages at a rate not less than the prevailing
wage rate established by the Commissioner of Labor for the Locality
in
which the project is located.
|
o Yes o No
|
7.
|
I/We
require each subcontractor as part of the contract to agree to
pay to
workers employed in the construction of the project at a rate not
less
than the prevailing wage rate as determined by the Commissioner
of Labor
and to comply with the Authority's Affirmative Action
Regulations.
|
o Yes o No
|
8.
|
I/We
are aware that I/we will be required to provide copies of weekly
payroll
records and minority hiring reports for all workers employed in
the
construction of the project including workers employed by subcontractors.
Also, the Monthly Project ▇▇▇▇▇▇▇ Reports will be submitted within
seven
(7) days of the end of each month.
|
o Yes o No
|
9.
|
I/We
require each of my/our subcontractors and lower-tier subcontractors
to
complete and execute a Subcontractor's Certificate before entering
into
any contracts with the
subcontractor.
|
o Yes o No
E-2
1011002.2
Affirmative
Action Certificate
Page
3 of
3
|
10.
|
I/We
agree in consideration of any amount paid by the Project/Owner
under the
construction contract and in consideration of the approval of the
Affirmative Action Officer of any construction advance, that the
Authority
in its own name or in the name of the Project/Owner may take action,
in
law or in equity, to enforce the provisions of the construction
contract
regarding compliance with the Affirmative Action
Regulations.
|
o Yes o No
|
11.
|
I/We
will provide to the Authority, or its designated representative,
complete
access to all payroll records and other records necessary to purposes
of
determining compliance with the Authority's Affirmative Action
Regulations.
|
o Yes o No
|
12.
|
I/We
will keep accurate records identifying the name, address, Social
Security
Number, race, sex, craft or trade, number of hours worked in each
craft or
trade, hourly wage rate, gross earnings paid and all deductions
made from
wages earned to each worker employed by me/us in connection with
the
performance of the Construction Contract and will preserve such
records
for two years from the date of completion of the
project.
|
o Yes o No
|
13.
|
The
approximate date for the start of construction
is/was:
|
MONTH
_________________________ DAY ____________ YEAR______________
|
14.
|
"This
Contract is subject to the requirement of the Affirmative Action
Regulations N.J.A.C. 19:30-3.1 of the New Jersey Economic Development
Authority revised August 8, 1990. The Subcontractor agrees to make
every
effort to meet the applicable employment goals and to comply with
all
applicable provisions of the Affirmative Action Regulation N.J.A.C.
19:30-3.1, as amended and supplemented from time to time, including
the
submission of the employment reports to the Authority. This contract
is
subject to N.J.A.C. 19:30-4.1 et. seq. The construction of the
work shall
be paid at a rate not less than the prevailing wage rate established
by
the New Jersey Commissioner of Labor pursuant to N.J.S.A. 34:11-56:30.
The
Subcontractor shall keep accurate records showing the name, race,
sex,
craft or trade, and actual hourly rate of wages paid to each worker
employed in connection with construction of the work and to preserve
such
records for two (2) years from completion of the
Work."
|
|
SIGNATURE
|
|
NAME
(Please
Print)
|
|
TITLE
|
|
DATE
|
(Rev.2/98)
E-3
1011002.2
EXHIBIT
F
NEW
JERSEY ECONOMIC DEVELOPMENT AUTHORITY
COMPLETION
CERTIFICATE
NJEDA
PROJECT NUMBER
PROJECT
OWNER/APPLICANT NAME
PROJECT
LOCATION (include
Street, City and County)
Completion
Certificate to be completed by Subcontractor, Construction Manager, General
Contractor AND Project Owner/Applicant and forwarded
to:
NJ
Economic Development Authority
ATTN:
Affirmative Action
Gateway
▇▇▇ - ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇.
I/We
the
undersigned o Subcontractor
o
Construction Manager o General
Contractor, certify to the New Jersey Economic Development Authority and
the
Project Owner/Applicant as follows:
|
1.
|
Construction
of the above project is substantially
complete.
|
|
2.
|
All
workers employed in construction of the Project have been paid
at a rate
not less than the Prevailing Wage rate. In making this certification
I
have relied on payroll records submitted by subcontractors and
lower-tier
contractors.
|
|
3.
|
We
have met the minority availability required percentage goals established
by the Authority's Affirmative Action Regulations (N.J.A.C. 19:30-3.1
et
seq.).
We have submitted all reports and certificates required by the
Authority
|
DATE___________________
Signature
of Authorized Representative for Subcontractor
Print
Name & Title
Print OR Type Company Name of Subcontractor
▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇ ▇▇ ▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇ and Zip Code of Subcontractor
DATE___________________
Signature
of Authorized Representative for (check one)
o Construction
Manager o General
Contractor
Print
Name
& Title
Print or Type Company Name of (check one)
o Construction
Manager o General
Contractor
Street Address or PO Box of (check one)
o Construction
Manager o General
Contractor
City, State and Zip Code of (check one)
o Construction
Manager o General
Contractor
F-1
1011002.2
Completion
Certificate
Page
2
I/We,
the
undersigned authorized representative of the Project Owner/Applicant, certify
as
follows:
|
1.
|
I/We
have reviewed the attached Completion Certificate of the
Contractor.
|
|
2.
|
I/We
have no knowledge or information which would cause me/us to believe
that
any facts, information or representations made herein are false
or
misleading.
|
DATE_______________
Signature
of Authorized Representative for Project Owner/Applicant
Print Name & Title
Print
OR
Type Project Owner/Applicant Name
Street Address OR PO Box of Project Owner/Applicant
City, State and Zip Code of Project Owner/Applicant
DO
NOT
WRITE BELOW THIS LINE - FOR NJEDA USE ONLY
|
DATE
INFO RECEIVED
|
REQUEST
OUTSTANDING
|
RELEASE
AUTHORIZED
|
|||
|
Certificate
|
CPRs
|
Certificate
|
CPRs
|
By
|
Date
|
Please
Note: Outstanding
information requested on ____________________________ has not been
received
Special
Considerations:
F-2
1011002.2